Table of suppliers offering products containing only DRC conflict free parts, components and subassemblies and, as a result, HBB cannot be sure that it will be able to satisfy its purchase requirements from such suppliers in sufficient quantities or at competitive prices. Any one or a combination of these various factors could harm HBB’s business, and materially and adversely affect HBB’s results of operations.Contents

HBB is subject in the ordinary course of its business, in the ~~United States~~U.S. and elsewhere, to many statutes, ordinances, rules and regulations that, if violated by HBB or its affiliates, partners or vendors, could have a material adverse effect on HBB’s business. HBB is required to comply with the ~~United States~~U.S. Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery, anti-corruption and anti-kickback laws adopted in many of the countries in which HBB does business which prohibit HBB from engaging in bribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business and also require maintenance of adequate record-keeping and internal accounting practices to accurately reflect transactions. Under the FCPA, companies operating in the ~~United States~~U.S. may be held liable for actions taken by their strategic or local partners or representatives. If HBB does not properly implement and maintain practices and controls with respect to compliance with applicable anti-corruption, anti-bribery and anti-kickback laws, or if HBB fails to enforce those practices and controls properly, HBB may be held responsible for their actions and may become subject to regulatory sanctions, including administrative costs related to governmental and internal investigations, civil and criminal penalties, injunctions and restrictions on HBB’s business and capital raising activities, any of which could materially and adversely affect HBB’s business, results of operations and financial condition.

~~HBB may be subject to risks relating to increasing cash requirements of certain employee benefits plans, which may affect its financial position.~~

Because HBB’s defined benefit pension plans are frozen and no longer provide for the accrual of future benefits, the expenses recorded for, and cash contributions required to be made to its defined benefit pension plans are dependent on, changes in market interest rates and the value of plan assets, which, in turn, are dependent on actual investment returns. Significant changes in market interest rates, decreases in the value of plan assets or investment losses on plan assets may require HBB to increase the cash contributed to its defined benefit pension plans which may affect its financial position.

~~The Kitchen Collection, LLC~~

~~As consumer shopping habits change, foot traffic to brick and mortar stores could continue to decline and result in a loss of~~

~~market share, revenues and profitability, and store closures at a more rapid pace than in the past.~~

The continuing and accelerating shift in consumer shopping patterns from traditional brick and mortar stores to e-commerce has resulted in declining mall traffic which has impacted most retailers. Our stores are located in outlet and traditional malls and our success depends in part on the overall ability of these malls to successfully generate and maintain customer foot traffic. We cannot control the success of individual malls, or store closures by other retailers, which may lead to mall vacancies and reduced customer foot traffic. Reduced customer foot traffic could result in reduced revenues and profitability.

~~The market for KC’s products is highly seasonal and dependent on consumer spending, which could result in significant variations in our revenues and profitability.~~

Sales of products sold at KC stores are subject to a number of factors related to consumer spending, including general economic conditions affecting disposable consumer income such as unemployment rates, business conditions, interest rates, levels of consumer confidence, energy prices, mortgage rates, the level of consumer debt and taxation. In addition, KC generally recognizes a substantial portion of its revenues and operating profit in the last half of the year as sales to consumers increase significantly with the fall holiday-selling season. Accordingly, any economic downturn, decrease in consumer spending or a shift in consumer spending away from KC’s products could significantly reduce, or cause significant variations in, KC’s revenues and profitability.

~~KC faces an extremely competitive specialty retail market, and such competition could result in a reduction of KC’s prices and loss of market share.~~

The retail market is highly competitive. KC competes against a diverse group of retailers, including specialty stores, department stores, discount stores and internet and catalog retailers. Widespread sourcing of Chinese products allows many retailers to offer value-priced kitchen products. Many of KC’s competitors are larger and have significantly greater financial, marketing and other resources. This competition could result in the reduction of KC product prices and a loss of market share, revenues and profitability.

~~KC may not be able to forecast customer preferences accurately in its merchandise selections.~~

KC’s success depends in part on its ability to anticipate the tastes of its customers and to provide merchandise that appeals to their preferences. KC’s strategy requires merchandising staff to introduce products that meet current customer preferences and that are affordable and distinctive in quality and design. KC’s failure to anticipate, identify or react appropriately to changes in consumer trends could cause excess inventories and higher mark-downs or a shortage of products and could harm KC’s business and operating results.

~~KC depends on third-party suppliers for most of its products, which subjects KC to risks, including unanticipated increases in expenses, decreases in revenues and disruptions in the supply chain.~~

KC is dependent on third-party suppliers for all of its products. KC’s inability to select reliable suppliers who provide timely deliveries of quality products could reduce its success in meeting customer demand. Any inability of KC’s suppliers to timely deliver products or any unanticipated changes in suppliers could be disruptive and costly to KC. The loss of a supplier could, in the short term, adversely affect KC’s business until alternative supply arrangements are secured. In addition, KC may not be able to acquire desired merchandise in sufficient quantities on acceptable terms in the future. KC’s business could also be adversely affected by delays in product shipments due to freight difficulties, strikes or other difficulties at its principal transport providers. Any significant failure by KC to obtain products on a timely basis at an affordable cost or any significant delays or interruptions of supplyU.S. government trade actions could have a material adverse effect on ~~KC’s profitability.~~Hamilton Beach Brands Holding Company’s subsidiaries, financial position, and results of operation.

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~~KC may be forced to close~~The U.S. government has taken a ~~significant~~ number of ~~stores,~~trade actions that impact or could impact our operations, including imposing tariffs on certain goods imported into the United States. In addition, several governments, including the European Union, China and India, have imposed tariffs on certain goods imported from the United States. As the majority of our products are imported into the United States from China, many of our product lines are subject to the tariffs imposed under Section 301 of US trade law that have been applied to separate lists of Chinese goods imported into the United States. The Section 301 tariffs on goods covered by lists 1, 2, 3 and 4a affect approximately 25% of total HBB purchases on an annualized basis. On December 13, 2019, the United States Trade Representative (USTR) announced a “Phase One” agreement with China pursuant to which the U.S. government agreed to suspend the 15% tariffs on List 4b products. On January 15, 2020, USTR issued a Federal Register notice reducing the rate of Section 301 tariffs on List 4a products to 7.5%, effective February 14, 2020. A number of lawsuits and other legal challenges with respect to the Section 301 tariff actions could ~~adversely~~result in changes to the tariffs, and the Biden Administration reportedly will be considering whether to continue, amend, or revoke these particular trade actions. We are continually evaluating the impact ~~its profitability.~~

~~Although we have slowed~~of the ~~opening of~~current and any possible new ~~KC retail stores~~tariffs on our supply chain, costs, sales and have continued to close underperforming stores, the continuing and accelerating shift in consumer shopping patterns from traditional brick and mortar stores to e-commerce has resulted in declining outlet and traditional mall traffic, which has impacted most retailers. In the past, we have closed stores that did not generate acceptable profitability and are considering strategies to mitigate such impact, including reviewing sourcing options, filing requests for exclusion from the tariffs for certain product lines and working with our suppliers and customers. We can provide no assurance that any strategies we ~~may close additional stores in the future at a more rapid pace than in the past.~~

In addition, continued consolidation in the commercial retail real estate market could affect our ability to successfully negotiate favorable rental terms for our stores in the future. Should significant consolidation continue, a large proportion of KC’s stores could be concentrated with one or a few entities that could then be in a position to dictate unfavorable terms to KC due to their significant negotiating leverage. If KC is unable to negotiate favorable lease terms with these entities or if KC decides to close stores in the future and is unable to negotiate favorable terms with the landlords regarding the remaining lease obligations, KC could be liable for significant lease termination costs, which could have a material adverse effect on KC’s financial results.

~~Hamilton Beach Holding~~

~~Hamilton Beach Holding has no history operating as an independent public company prior to the spin-off on which you can evaluate Hamilton Beach Holding’s business strategy.~~

Hamilton Beach Holding has no operating history as an independent public company prior to the spin-off. Accordingly, Hamilton Beach Holding’s public company business strategy may not be successful on a stand-alone basis.

~~Hamilton Beach Holding is dependent on key personnel and the loss of these key personnel could significantly reduce its profitability.~~

Hamilton Beach Holding is highly dependent on the skills, experience and services of its and its subsidiaries’ key personnel and the loss of key personnel could have a material adverse effect on its business, operating results and financial condition. Employment and retention of qualified personnel is important to the successful conduct of Hamilton Beach Holding’s business. Therefore, Hamilton Beach Holding’s success also depends upon its ability to recruit, hire, train and retain current and additional skilled and experienced management personnel. Hamilton Beach Holding’s inability to hire and retain personnel with the requisite skills could impair its ability to manage and operate its business effectively and could significantly reduce its profitability.

Hamilton Beach Holding accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which it is now subject as an independent company. If Hamilton Beach Holding is not able to achieve and maintain effective internal controls, its business, financial condition, results of operations and cash flows could be materially adversely affected.

As a result of the spin-off, Hamilton Beach Holding is now directly subject to reporting and other obligations under the Securities Exchange Act of 1934 (the “Exchange Act”). These reporting and other obligations may place significant demands on Hamilton Beach Holding management and administrative and operational resources, including accounting resources. To comply with these requirements, Hamilton Beach Holding may need to implement additional financial and management controls, reporting systems and procedures and hire additional accounting and finance staff. Hamilton Beach Holding may incur additional annual expenses related to these steps. If Hamilton Beach Holding is unable to upgrade the financial and management controls, reporting systems, information technology and procedures in a timely and effective fashion, its ability to comply with the financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired. Any failure to achieve and maintain effective internal controls could have a material adverse effect on its business, financial condition, results of operations and cash flows.

~~Hamilton Beach Holding’s financing arrangements will subject Hamilton Beach Holding to various restrictions that could limit operating flexibility.~~

HBB’s and KC’s respective credit facilities contain covenants and other restrictions that, among other things, require HBB and KC to satisfy certain financial tests, maintain certain financial ratios and restrict HBB’s and KC’s ability to incur additional indebtedness. The restrictions and covenants in HBB’s and KC’s respective credit facilities, and other future financing arrangements may limit HBB’s and KC’s ability to respond to market conditions, provide for capital investment needs or take advantage of business opportunities by limiting the amount of additional borrowings HBB and KC may incur.

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~~Hamilton Beach Holding’s business could suffer if HBB’s or KC’s information technology systems are disrupted, cease to operate effectively or become subject to a security breach.~~

Hamilton Beach Holding and its subsidiaries rely heavily on information technology systems to operate websites; record and process transactions; respond to customer inquiries; manage inventory; purchase, sell and ship merchandise on a timely basis; and maintain cost-efficient operations. Given the significant number of transactions that are completed annually, it is vital to maintain constant operation of computer hardware and software systems and maintain cyber security. Despite our cyber security efforts, our information technology systems may be vulnerable from time to time to damage or interruption from computer viruses, power outages, third-party intrusions and other technical malfunctions. If our systems are damaged, or fail to function properly, we may have to make monetary investments to repair or replace the systems and could endure delays in operations.

In addition, we regularly evaluate information technology systems and requirements and from time to time implement modifications and/or upgrades to our information technology systems. Modifications include replacing existing systems with successor systems, making changes to existing systems and acquiring new systems with new functionality. There are inherent risks associated with replacing and modifying these systems, including inaccurate system information, system disruptions and user acceptance and understanding. We believe we are taking appropriate action to mitigate the ~~risks but there can be no assurance that our~~impact of such tariffs or other trade actions will be ~~successful or sufficient.~~

Any material disruption or slowdown of our systems, including a disruption or slowdown caused by a security breach or our failure to successfully upgrade its systems, could cause information, including data related to customer orders, to be lost or delayed. Such a loss or delay could reduce demandsuccessful. Given the uncertainty regarding the scope and ~~cause our sales and/or profitability to decline.~~

Through sales and marketing activities and business operations, we collect and store confidential information and certain personal information from its customers, vendors and employees. For example, KC handles, collects and stores personal information in connection with customers’ purchasing products or services, or otherwise communicating or interacting with KC. KC also accepts payments using a variety of methods, including debit and credit cards, gift cards, electronic transfer of funds and others. Although KC has taken steps designed to safeguard such information, there can be no assurance that such information will be protected against unauthorized access, use or disclosure. Unauthorized parties may attempt to penetrate our and our vendors’ network security and, if successful, misappropriate such information. Additionally, methods to obtain unauthorized access to confidential information change frequently and may be difficult to detect, which can impact our ability to respond appropriately. We could be subject to liability for failure to comply with privacy and information security laws, for failing to protect personal information or for failing to respond appropriately. Loss, unauthorized access to, or misuse of confidential or personal information could disrupt our operations, damage our reputation, and expose us to claims from customers, financial institutions, regulators, payment card associations, employees and other persons, any of which could have an adverse effect on our business, financial condition and results of operations.

The transition services agreement Hamilton Beach Holding entered into with NACCO contains early termination provisions that, if exercised by NACCO, could prevent Hamilton Beach Holding from operating Hamilton Beach Holding’s business in a cost-efficient manner and could disrupt Hamilton Beach Holding’s operations.

Hamilton Beach Holding entered into a transition services agreement with NACCO on September 29, 2017. Under the terms of the transition services agreement, the Company obtains certain services from NACCO on a transition basis for varying periods after the spin-off date, none of which is expected to exceed one year, with the option to extend the transition periods for one or more services. The transition services agreement is subject to early termination provisions. For instance, either Hamilton Beach Holding or NACCO may terminate the agreement if:

~~the other party has violated any material provision of the agreement and such violation has not been remedied within 30 days after written notice thereof; or~~

~~the other party has filed, or has had filed against it, a petition seeking relief under any bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor’s rights.~~

In addition, both NACCO and Hamilton Beach Holding may terminate any transition service that is being provided at any time by giving such party 30 days’ prior written notice of its intention to do so. NACCO and Hamilton Beach Holding may also terminate the agreement by mutual written agreement. Early termination of this agreement by NACCO could increase Hamilton Beach Holding’s transition-related costs and could disrupt our new public company operations.

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~~Hamilton Beach Holding may experience increased costs or decreased operational efficiencies as a result of its needing to replace corporate functions previously provided by NACCO.~~

NACCO has historically assisted with certain Hamilton Beach Holding operations, including accounting, finance, tax administration, internal audit and strategic development. Pursuant to the transition services agreement, NACCO will provide support to Hamilton Beach Holding with respect to someduration of these ~~functions, including:~~

~~general accounting support;~~

~~support in responding to requests from regulatory and compliance agencies;~~

~~tax compliance and consulting support;~~

~~internal audit services and internal audit consulting and advisory services;~~

~~general legal support;~~

~~employee benefit and human resources legal and consulting support;~~

~~compensation support; and~~

~~investor relations support,~~

~~for varying periods after~~trade actions by the spin-off date, none of which is expected to exceed one year, with the option to extend the transition periods for one or more services. Hamilton Beach Holding will need to replicate certain personnel and services to which Hamilton Beach Holding will no longer have access after our spin-off from NACCO. Hamilton Beach Holding may incur additional costs to implement and support these functions.

In addition, there may be an adverse operational impact on Hamilton Beach Holding’s businesses as a result of the significant Hamilton Beach Holding management and employee time that will be dedicated to building these capabilities during the first few years after the spin-off. If Hamilton Beach Holding begins to operate these functions independently, without implementing adequate business functions of our own, Hamilton Beach Holding may not be able to operate effectively and its profitability may decline.

~~We might not be able to engage in desirable strategic transactions and equity issuances because of certain restrictions relating to requirements for tax-free distributions.~~

~~Our ability to engage in equity transactions could be limited or restricted in order to preserve, for~~ U.S. federal income tax purposes, the tax-free nature of the spin-off. Even if the spin-off otherwise qualifies for tax-free treatment under the Code, it may result in corporate-level taxable gain to NACCO under the Code if there is a 50% or greater change in ownership, by vote or value, of shares of our stock or NACCO’s stock occurring as part of a plan or series of related transactions that includes the spin-off. Any acquisitions or issuances of our stock or NACCO’s stock within two years before or two years after the spin-off are generally presumed to be part of such a plan, although we or NACCO may be able to rebut that presumption. It is unclear whether any increase in voting power by holders of our Class B Common Stock by reason of the conversion by other holders of Hamilton Beach Holding Class B Common Stock to Hamilton Beach Holding Class A Common Stock should be considered an acquisition of voting power as part of a plan or series of related transactions. However, even if so treated, any such voting shift would not alone cause an acquisition of 50% or more of the voting power of our Common Stock and, as a result, would not, by itself, cause the spin-off to be taxable to NACCO under Section 355(e) of the Code.

Under the Tax Allocation Agreement entered into with NACCO, we are prohibited from taking or failing to take any action that prevents the spin-off from being tax-free. Further, during the two-year period following the spin-off, without obtaining the consent of NACCO, a private letter ruling from the Internal Revenue Service or an unqualified opinion of a nationally recognized law firm, we may be prohibited from:

~~approving or allowing any transaction that results in a change in ownership of 35% or more of the value or 5% or more of the voting power of our common stock;~~

~~redeeming equity securities;~~

~~selling or otherwise disposing of more than 35% of the value of our assets;~~

~~acquiring a business or assets with equity securities to the extent one or more persons would acquire 35% or more of the value or 5% or more of the voting power of our common stock; and~~

~~engaging in certain internal transactions.~~

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~~These restrictions may limit our ability to pursue strategic transactions or engage in new businesses~~government or other ~~transactions that could maximize the value of our business.~~

~~The amount and frequency of dividend payments made on Hamilton Beach Holding’s common stock could change.~~

Hamilton Beach Holding’s board of directors (the "Board") has the power to determine the amount and frequency of the payment of dividends. Decisions regarding whether or not to pay dividends and the amount of any dividends are based on earnings, capital, and future expense requirements, financial conditions, contractual limitations and other factors our Board may consider.

Certain members of the extended founding family of NACCO own a substantial amount of Hamilton Beach Holding’s Class A and Class B common stock, and if they were to act in concert, could control the outcome of director elections and other stockholder votes on significant actions.

Hamilton Beach Holding has two classes of common stock: Class A common stock ("Class A Common") and Class B common stock ("Class B Common"). Holders of Class A Common will be entitled to cast one vote per share and, as of December 31, 2017, accounted for approximately 15.57% of the voting power of Hamilton Beach Holding. Holders of Class B Common are entitled to cast ten votes per share and, as of December 31, 2017, accounted for the remaining voting power of Hamilton Beach Holding. As of December 31, 2017, certain members of NACCO’s extended founding family held approximately 37.96% of Hamilton Beach Holding’s Class A Common and 69.99% of Hamilton Beach Holding’s Class B Common. On the basis of this common stock ownership, certain members of NACCO’s extended founding family could exercise 65.01% of Hamilton Beach Holding’s total voting power. Although there is no voting agreement among such family members, in writing or otherwise, if they were to act in concert, they would exert significant control over the outcome of director elections and other stockholder votes on significant actions, such as certain amendments to Hamilton Beach Holding’s amended and restated certificate of incorporation and sales of Hamilton Beach Holding or substantially all of its assets. Because such family members could prevent other stockholders from exercising significant influence over significant corporate actions, Hamilton Beach Holding may be a less attractive takeover target, which could adversely affect the market price of its common stock.

~~Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws,~~countries, as well as ~~provisions of Delaware law, could impair a takeover attempt that stockholders may consider favorable.~~the potential for additional trade actions, the impact on our operations and results remains uncertain.

Our certificate of incorporation and bylaws provisions, as amended and restated in connection with us becoming a public company, may have the effect of delaying, deferring or discouraging a prospective acquiror from making a tender offer for our shares or otherwise attempting to obtain control of us. These provisions, among other things, establish that our Board fixes the number of members of the Board, and establish advance notice requirements for nomination of candidates for election to the Board or for proposing matters that can be acted on by stockholders at stockholder meetings. To the extent that these provisions discourage takeover attempts, they could deprive stockholders of opportunities to realize takeover premiums for their shares. Moreover, these provisions could discourage accumulations of large blocks of our common stock, thus depriving stockholders of any advantages that large accumulations of stock might provide.

Any provision of our amended and restated certificate of incorporation or our amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

~~We are~~The Company is an “emerging growth company” and as a result of the reduced disclosure requirements applicable to emerging growth companies, ~~our common stock may be less attractive to investors and~~ the reduced disclosures may make it more difficult to compare our performance with other public ~~companies~~.companies.

We are an “emerging growth company”, as defined in the Jumpstart ~~our~~Our Business Startups Act ("of 2012 (“JOBS ~~Act"~~Act”)~~. For as long as we continue to be an emerging growth company,~~, and we may ~~choose to~~ take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not ~~emerging~~“emerging growth ~~companies, which include, among other things:~~

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~~exemption from~~companies” including, but not limited to, not being required to comply with the auditor attestation requirements ~~under~~of Section 404 of the Sarbanes-Oxley Act, ~~of 2002;~~

reduced disclosure obligations regarding executive compensation in our periodic reports and proxy ~~statements;~~

~~exemption~~statements, and exemptions from the requirements of holding ~~non-binding stockholder votes~~a nonbinding advisory vote on executive compensation ~~arrangements;~~ and shareholder approval of any golden parachute payments not previously approved.

~~exemption from any rules of~~

In addition, the ~~Public Accounting Oversight Board (PCAOB) requiring mandatory audit firm rotation and auditor discussion and analysis and, unless the SEC otherwise determines, any future audit rules~~JOBS Act also provides that ~~may be adopted by the PCAOB.~~

~~We could be~~ an emerging growth company ~~until the last day~~can take advantage of the fiscal year following the fifth anniversary of the consummation of the spin-off date, or until the earliest of (i) the last day of the fiscal year in which we have annual gross revenue of $1.07 billion or more, (ii) the date on which we have, during the previous three yearan extended transition period issued more than $1 billion in non-convertible debt or (iii) the date on which we are deemed to be a large accelerated filer under the federal securities laws. We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our non-affiliates and (ii) been public for ~~at least 12 months. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.~~

~~Under the JOBS Act, emerging growth companies are also permitted to elect to delay adoption of~~complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until ~~companies that are not subject to periodic reporting obligations are required to comply with~~ those standards ~~if such accounting standards~~would otherwise apply to ~~non-reporting~~private companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with those of another public company ~~which~~that is neither (i) an emerging growth company nor (ii) an emerging growth company ~~which~~that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

We ~~cannot predict~~will remain an emerging growth company for up to five years, although we will lose that status sooner if ~~investors will find~~ our revenues exceed $1.07 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if we are deemed to be a large accelerated filer under the federal securities laws.

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Registered Securities Risk

The amount and frequency of dividend payments made on Hamilton Beach Holding’s common stock ~~less attractive~~could change.

The Company's Board has the power to determine the amount and frequency of the payment of dividends. Decisions regarding whether or not to pay dividends and the amount of any dividends are based on earnings, capital, and future expense requirements, financial conditions, contractual limitations and other factors our Board may consider.

Certain members of the Company's extended founding family own a substantial amount of Class A Common and Class B Common, and if ~~we rely~~they were to act in concert, could control the outcome of director elections and other stockholder votes on ~~these exemptions. If some investors find our~~significant actions.

Hamilton Beach Holding has two classes of common stock: Class A Common and Class B Common. Holders of Class A Common will be entitled to cast one vote per share and, as of December 31, 2020, accounted for approximately 19.25% of the voting power of Hamilton Beach Holding. Holders of Class B Common are entitled to cast ten votes per share and, as of December 31, 2020, accounted for the remaining voting power of Hamilton Beach Holding. As of December 31, 2020, certain members of the Company's extended founding family held approximately 34.41% of Class A Common and 80.75% of Class B Common. On the basis of this common stock ~~less attractive~~ownership, certain members of the Company's extended founding family could exercise 71.83% of the Company's total voting power. Although there is no voting agreement among such family members, in writing or otherwise, if they were to act in concert, they would exert significant control over the outcome of director elections and other stockholder votes on significant actions, such as ~~a result, there~~certain amendments to the Company's amended and restated certificate of incorporation and sale of the Company or substantially all of its assets. Because such family members could prevent other stockholders from exercising significant influence over significant corporate actions, the Company may be a less ~~active trading~~attractive takeover target, which could adversely affect the market ~~for our common stock and the~~ price of ~~our~~its common ~~stock may be more volatile.~~stock.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

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Item 2. PROPERTIES

~~A. Hamilton Beach Brands~~

The following table presents the principal distribution and office facilities owned or ~~leased by HBB:~~

leased:

Owned/

Facility Location

Leased

Function(s)⁽²⁾

Glen Allen, Virginia

Leased

Corporate headquarters

Geel, Belgium

(1)

Distribution center

Shenzhen, People's Republic of China

(1)

Distribution center

Mexico City, Mexico

Leased

Mexico sales and administrative headquarters

Olive Branch, Mississippi

Leased

Distribution center

~~Picton,~~Belleville, Ontario, Canada

Leased

Distribution center

Southern Pines, North Carolina

Owned

Service center for customer returns; catalog distribution center; parts distribution center

Shenzhen, People's Republic of China

Leased

Administrative office

Markham, Ontario, Canada

Leased

Canada sales and administration headquarters

~~City of Sao Paulo, Sao Paulo,~~Joinville, Santa Catarina, Brazil

~~Leased~~(1)

~~Brazil sales and administrative headquarters~~Distribution center

~~Jundiai, Sao Paulo, Brazil~~

~~(1)~~

~~Distribution center~~

Shanghai, People's Republic of China

Leased

Sales office

~~Shanghai,~~Suzhou, People's Republic of China

(1)

Distribution center

~~Independence, Ohio~~Tultitlan, Mexico

~~Leased~~(1)

~~Weston Brands sales office~~Distribution center

~~Tultitlan, Mexico~~Byhalia, Mississippi

~~(1)~~Leased

Distribution center


~~(1)~~	~~This facility is not owned or leased by HBB. This facility is managed by a third-party distribution provider.~~


~~(2)~~	~~Sales offices are also leased in several cities in the United States, Canada, China and Mexico.~~

~~B. The Kitchen Collection~~

(1)This facility is not owned or leased by HBB. This facility is managed by a third-party distribution provider.

~~KC leases its corporate headquarters building~~(2)Sales offices are also leased in several cities in the U.S., Canada, China and ~~the KC warehouse/distribution facility in Chillicothe, Ohio. KC leases its retail stores. A typical store is approximately 3,000 square feet. At December 31, 2017, KC operated 210 stores.~~Mexico.

Item 3. LEGAL PROCEEDINGS

The information required by this Item 3 is set forth in Note 11 "Contingencies" included in our Financial Statements and Supplementary Data contained in Part IV of this Form 10-K and is hereby incorporated herein by reference to such information.

~~Neither the Company nor any of its subsidiaries is a party to any material legal proceeding other than ordinary routine litigation incidental to its respective business.~~

Item 4. MINE SAFETY DISCLOSURES

None.

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~~EXECUTIVE OFFICERS OF THE REGISTRANT~~

~~The information under this Item is furnished pursuant to Instruction 3 to Item 401(b) of Regulation S-K.~~

There exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was elected. Each executive officer serves until his or her successor is elected and qualified.

~~The following tables set forth as of March 7, 2018 the name, age, current position and principal occupation and employment during the past five years of the Company’s executive officers.~~

~~EXECUTIVE OFFICERS OF THE COMPANY~~



~~Name~~	~~Age~~	~~Current Position~~	~~Other Positions~~

~~Alfred M. Rankin, Jr.~~	75	~~Executive Chairman of Hamilton Beach Holding (from October 1, 2017)~~	Chairman, President and Chief Executive Officer of Hyster-Yale (from prior to 2013), Chairman of Hyster-Yale Group, formerly NACCO Materials Handling Group, Inc. (from prior to 2013), Non-Executive Chairman of NACCO Industries, Inc. (from September 2017), Chairman of NACoal (from prior to 2013). From prior to 2013 to September 2017, Chairman, President and CEO of NACCO. From prior to 2013 to 2014, Director of The Vanguard Group.
~~Gregory H. Trepp~~	56	President and Chief Executive Officer of Hamilton Beach Holding (from September 2017); President and Chief Executive Officer of HBB (from prior to 2013); Chief Executive Officer of KC (from prior to 2013)	~~Interim President of KC (from November 2013 to December 2014).~~
~~Keith B. Burns~~	61	~~Vice President, Engineering and Information Technology of HBB (from prior to 2013)~~
~~Gregory E. Salyers~~	57	~~Senior Vice President, Global Operations of HBB (from prior to 2013)~~
~~Dana B. Sykes~~	56	Vice President, General Counsel and Secretary of Hamilton Beach Holding (from September 2017); Vice President, General Counsel and Secretary of HBB (from September 2015); Assistant Secretary of KC (from May 2015)	From July 2014 to September 2015, Associate General Counsel, Assistant Secretary and Senior Director, Human Resources of HBB. From prior to 2013 to July 2014, Assistant General Counsel and Director, Human Resources of HBB. From prior to 2013, Assistant General Counsel of HBB.
~~James H. Taylor~~	60	~~Vice President, Chief Financial Officer and Treasurer of Hamilton Beach Holding (from September 2017); Vice President and Chief Financial Officer of HBB (from prior to 2013)~~
~~R. Scott Tidey~~	53	~~Senior Vice President, North America Sales and Marketing of HBB (from prior to 2013)~~
~~Robert O. Strenski~~	61	~~President of KC (from January 2015)~~	Vice President, General Merchandise Manager of KC (from February 2014 to December 2014); General Merchandise Manager of KC (from June 2013 to January 2014); Vice President, Divisional Merchandise Manager, Consumables, Biglots Stores, Inc. (from prior to 2013 to January 2013).

~~PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES~~

~~A. HBB~~



~~Name~~	~~Age~~	~~Current Position~~	~~Other Positions~~
~~D. Scott Butler~~	66	~~Senior Director, Controller of HBB (from October 2017)~~	~~From prior to 2013 to October 2017, Corporate Controller~~

~~Richard E. Moss~~	54	~~Senior Director, Finance &Treasurer of HBB (from prior to 2013)~~

~~Derek R. Redmond~~	41	~~Assistant Secretary of Hamilton Beach Holding (from September 2017); Assistant Secretary and Senior Counsel of HBB (from September 2017); Assistant Secretary of KC (from September 2017)~~	~~Senior Counsel of HBB (from prior to 2013)~~

~~B. KC~~

~~Table of Contents~~

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~Hamilton Beach Holding's~~The Company's Class A Common is traded on the New York Stock Exchange under the ticker symbol “HBB.” Because of transfer restrictions, no trading market has developed, or is expected to develop, for the Company's Class B Common. The Class B Common is convertible into Class A Common on a one-for-one basis. ~~The Company currently intends to pay regular quarterly dividends.~~

The declaration of future dividends, ~~and the establishment of the per share amount,~~ record dates and payout dates for such future dividends will be at the discretion of the ~~Company's~~ Board and will depend on various factors then existing, including earnings, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends, restrictions imposed by applicable law, general business conditions and other factors that the ~~Company's~~ Board deems relevant.

The high and low sales prices for the Class A Common and dividends per share for both classes of common stock for each quarter since the Company was spun-off and the Class A Common became publicly traded is presented in the table below:

2017
Sales Price
High Low Cash Dividend
Fourth quarter $ 39.89
$ 24.97
$ 0.0850

At December 31, ~~2017~~,2020 and 2019, there were ~~789~~773 and 780, respectively, Class A Common stockholders of record and ~~864~~890 and 902, respectively, Class B common stockholders of record.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In May 2018, the Company approved a stock repurchase program for the purchase of up to $25.0 million of the Company's Class A Common Stock outstanding through December 31, 2019. On November 5, 2019, the Company's Board adopted a new stock repurchase program for the purchase of up to $25.0 million of the Company's Class A Common Stock outstanding starting January 1, 2020 and ending December 31, 2021. During the year ended December 31, 2019, the Company repurchased 364,893 shares for an aggregate purchase price of $6.0 million. There were no share repurchases during the years ended December 31, 2020 and 2018.

Table of Contents

Item 6. SELECTED FINANCIAL DATA

The following table sets forth the Company's selected historical financial data as of and for each of the periods indicated. ~~The Company derived~~Except where indicated, the ~~summary historical~~results of operations, financial ~~data~~position, and cash flows of KC are reflected as ~~of and~~discontinued operations for ~~each of the three years ended December 31, 2017 from the Company's audited consolidated financial statements.~~all periods reported. This information is only a summary and should be read in conjunction with the historical consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The selected consolidated financial information below as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019 and 2018, are derived from our audited consolidated financial statements included in this Annual Report on Form 10-K. The selected financial data as of December 31, 2017 and 2016 and for the year ended December 31, 2016 are derived from unaudited consolidated financial statements, which were prepared on the same basis as our audited consolidated financial statements and reflect the impact of adjustments to our previously filed financial information.


	Year Ended December 31
	2020		2019		2018		2017		2016
	(In thousands, except per share amounts)
Operating Statement Data:
Revenue	$	603,713	$	611,786	$	630,082	$	612,056	$	601,006
Operating profit	$	37,415	$	26,794	$	33,550	$	37,956	$	39,561

Income from continuing operations, net of tax	$	24,067	$	15,093	$	23,059	$	18,109	$	24,277
Income (loss) from discontinued operations, net of tax	$	22,191	$	(28,600)	$	(5,361)	$	(2,225)	$	259
Net income (loss)	$	46,258	$	(13,507)	$	17,698	$	15,884	$	24,536

Basic earnings (loss) per share:
Continuing operations	$	1.76	$	1.10	$	1.68	$	1.32	$	1.78
Discontinued operations	1.62		(2.09)		(0.39)		(0.16)		0.01
Basic earnings (loss) per share	$	3.39	$	(0.99)	$	1.29	$	1.16	$	1.79

Diluted earnings (loss) per share:
Continuing operations	$	1.76	$	1.10	$	1.68	$	1.32	$	1.78
Discontinued operations	1.62		(2.09)		(0.39)		(0.16)		0.01
Diluted earnings (loss) per share	$	3.37	$	(0.99)	$	1.29	$	1.16	$	1.79

Actual shares outstanding at December 31 (1)	13,686		13,516		13,713		13,673		13,673
Basic weighted average shares outstanding (1)	13,657		13,690		13,699		13,673		13,673
Diluted weighted average shares outstanding (1)	13,712		13,726		13,731		13,685		13,673

Year Ended December 31
2017 2016 2015
(In thousands, except per share data)
Operating Statement Data:
Revenues $ 740,749
$ 745,357
$ 767,862
Operating profit $ 38,135
$ 43,374
$ 35,554
Net income $ 17,905
$ 26,179
$ 19,711

Basic earnings per share ⁽¹⁾
$ 1.31

$ 1.91

$ 1.44

Diluted earnings per share⁽¹⁾
$ 1.31

$ 1.91

$ 1.44

~~Table of Contents~~

Year Ended December 31
2017 2016 2015
(In thousands, except per share data, share amounts and employee data)
Balance Sheet Data at December 31:
Total assets
$ 326,233
$ 310,833
$ 310,128
Long-term portion of revolving credit agreements $ 20,000
$ 26,000
$ 50,000
Stockholders' equity $ 46,408
$ 65,268
$ 82,824

Cash Flow Data:
Provided by operating activities $ 33,440
$ 62,563
$ 26,488
Used for investing activities $ (7,353 ) $ (5,925 ) $ (6,543 )
Used for financing activities $ (26,602 ) $ (61,837 ) $ (10,088 )

Other Data:
Cash dividends paid to NACCO $ (38,000 ) $ (42,000 ) $ (15,000 )
Per share data:
Cash dividends on Class A Common and Class B Common⁽²⁾
$ 0.085
n/a
n/a
Market value at December 31⁽²⁾
$ 25.69
n/a
n/a
Stockholders' equity at December 31 $ 3.39
$ 4.77
$ 6.06

Actual shares outstanding at December 31⁽¹⁾
13,673
13,673
13,673
Basic weighted average shares outstanding⁽¹⁾
13,673
13,673
13,673
Diluted weighted average shares outstanding⁽¹⁾
13,685
13,673
13,673
Total employees at December 31 1,600
1,600
1,700

⁽¹⁾

(1) On September 29, 2017, NACCO, Hamilton Beach Holding's former parent company, spun-off the Company to NACCO stockholders. In the spin-off, NACCO stockholders, in addition to retaining their shares of NACCO common stock, received one share of Hamilton Beach Holding Class A Common and one share of Hamilton Beach Holding Class B Common for each share of NACCO Class A Common or Class B Common. The basic and diluted earnings per share amounts for the Company have been calculated based upon the number of shares distributed in the spin-off for all periods prior to the spin-off.


⁽²⁾	~~This information is only included for periods subsequent to the spin-off from NACCO.~~

~~OVERVIEW~~

Hamilton Beach Brands Holding Company (“Hamilton Beach Holding” or the “Company”) is an operating holding company for two separate businesses: consumer, commercial and specialty small appliances and specialty retail. Hamilton Beach Brands, Inc. (“HBB”) is a leading designer, marketer and distributor of branded small electric household and specialty housewares appliances as well as commercial products for restaurants, bars and hotels. The Kitchen Collection, LLC (“KC”) is a national specialty retailer of kitchenware operating retail stores in outlet and traditional malls throughout the United States. Results of operations and financial condition are discussed separately by segment, which corresponds with the industry groupings.

~~On September 29, 2017, NACCO Industries, Inc. ("NACCO"),~~ Hamilton Beach Holding's former parent company, spun-off the Company to NACCO stockholders. ~~In the spin-off, NACCO stockholders, in addition to retaining their shares of NACCO common stock, received one share of Hamilton Beach Holding Class A common stock~~The basic and one share of Hamilton Beach Holding Class B common stock for each share of NACCO Class A or Class B common stock. In accordance with applicable authoritative accounting guidance, the Company accounted for the spin-off from NACCO based on the historical carrying value of assets and liabilities. As a result of the distribution of one share of Hamilton Beach Holding Class A common stock and one share of Hamilton Beach Holding Class B common stock for each share of NACCO Class A or NACCO Class B common stock, thediluted earnings (loss) per share amounts for the Company for all periods prior to the spin-off have been calculated based upon the number of shares distributed in the spin-off. ~~NACCO did not receive any proceeds from the spin-off.~~

Table of Contents


	Year Ended December 31
	2020		2019		2018		2017		2016
	(In thousands, except per share amounts and employee data)
Balance Sheet Data at December 31:
Net working capital(2)	$	166,705	$	106,839	$	101,898	$	91,111	$	95,088
Total assets	$	391,168	$	288,663	$	321,419	$	325,276	$	310,141
Short-term portion of revolving credit agreements	$	—	$	23,497	$	11,624	$	31,346	$	12,714
Long-term portion of revolving credit agreements	$	98,360	$	35,000	$	35,000	$	20,000	$	26,000
Stockholders' equity	$	80,105	$	36,266	$	56,819	$	42,027	$	62,948

Cash Flow Data:
Net cash provided by (used for) operating activities from continuing operations	$	(27,934)	$	222	$	17,955	$	28,303	$	58,025
Net cash provided by (used for) investing activities from continuing operations	$	(3,812)	$	(4,122)	$	(7,759)	$	(6,177)	$	(4,788)
Net cash provided by (used for) financing activities from continuing operations	$	34,180	$	1,062	$	(9,255)	$	(26,532)	$	(61,837)

Other Data:
Cash dividends paid to NACCO Industries, Inc.	$	—	$	—	$	—	$	38,000	$	42,000
Cash dividends paid(1)	$	5,053	$	4,851	$	4,658	$	1,162	n/a
Purchase of treasury stock	$	—	$	5,960	$	—	$	—	n/a
Per share data:
Cash dividends paid(1)	$	0.37	$	0.36	$	0.34	$	0.09	n/a
Market value at December 31 (1)	$	17.51	$	19.10	$	23.46	$	25.69	n/a
Stockholders' equity at December 31	$	5.85	$	2.68	$	4.14	$	3.07	$	4.60

Total employees at December 31 for continuing operations	700		680		670		650		600


~~Item 7.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

(1) This information is only included for periods subsequent to the spin-off from NACCO.

(2) Net working capital is defined as trade receivables, net plus inventory less accounts payable.

Table of Contents

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

During the quarter ended March 31, 2020, the Company discovered certain accounting irregularities at its Mexican subsidiaries. As a result of the investigation performed, the Company, along with the Audit Review Committee and its third party experts, concluded that certain former employees of one of the Company’s Mexican subsidiaries engaged in unauthorized transactions with the Company’s Mexican subsidiaries that resulted in expenditures being deferred on the balance sheet beyond the period for which the costs pertained. The Company recorded a non-cash write-off for certain amounts included in the Company’s historical consolidated financial statements in trade receivables and prepaid expenses and other current assets, among other corrections, related to these transactions, and restated its consolidated financial statements as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018, and 2017 and each of the quarters during the years ended December 31, 2019 and 2018. The restatement also included corrections for other errors identified as immaterial, individually and in the aggregate, to our consolidated financial statements. These restated financial statements were previously filed on Form 10-K/A for the year ended December 31, 2019. All amounts included herein reflect the restated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with ~~U.S.~~accounting principles generally accepted ~~accounting principles.~~in the United States (“GAAP”). The preparation of ~~these~~ financial statements requires ~~the Company~~management to make estimates and ~~judgments~~assumptions that affect the reported amounts of assets, liabilities, ~~revenues and~~revenue, expenses and ~~related~~ disclosure of contingent assets and liabilities (if any). On an ongoing basis, the Company evaluates its estimates based on historical experience, actuarial valuations and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results ~~may~~could differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

~~Emerging Growth Company:~~ ~~Section 102(b)(1)~~Revenue Recognition: Revenue is recognized when control of the ~~JOBS Act exempts emerging growth companies~~promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales taxes are excluded from ~~being required to comply~~revenue. At contract inception, the Company assesses the goods and services promised in its contracts with ~~new~~customers and identifies a performance obligation for each promised good or ~~revised financial accounting standards until private companies (that~~service that is those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but an election to opt out is irrevocable.distinct. The Company has elected to account for shipping and handling activities performed after a customer obtains control of the goods as activities to fulfill the promise to transfer the goods, and therefore these activities are not assessed as a separate service to ~~opt out~~customers. The amount of ~~such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies,~~revenue recognized varies primarily with changes in returns. In addition, the Company ~~as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.~~

~~Revenue recognition:~~ ~~Revenues are recognized when title transfers and risk of loss passes~~offers price concessions to ~~the customer. Revenues at HBB are recognized when customer orders are completed and shipped. Revenues at KC are recognized at the point of sale when payment is made and~~our customers ~~take possession of the merchandise in stores. Reserves~~ for ~~discounts and returns are maintained for anticipated future claims at HBB and KC.~~

~~Product discounts:~~ ~~The Company records estimated reductions to revenues for customer programs and~~ incentive offerings, ~~including~~ special pricing agreements, price competition, promotions ~~and~~or other volume-based ~~incentives. At HBB, revenues represent gross sales less cooperative~~arrangements. We determine whether price concessions offered to our customers are a reduction of the transaction price and revenue or are advertising ~~other volume-based incentives, estimated~~expense, depending on whether we receive a distinct good or service from our customers and, if so, whether we can reasonably estimate the fair value of that distinct good or service. We evaluated such agreements with our customers and determined they should be accounted for as variable consideration.

To estimate variable consideration, the Company applies both the expected value method and most likely amount method based on the form of variable consideration, according to which method would provide the better prediction. The expected value method involves a probability weighted determination of the expected amount, whereas the most likely amount method identifies the single most likely outcome in a range of possible amounts.

The Company monitors its estimates of variable consideration, which includes returns and ~~allowances for defective products. At KC, retail markdowns are incorporated into KC’s retail method of accounting for cost of sales. If market conditions~~price concessions, and periodically makes adjustments to the carrying amounts as appropriate. During 2020, there were no material adjustments to ~~decline or if competition were to increase,~~ the ~~Company may take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenues at~~aforesaid estimates and the time the incentive is offered. If the Company's accrued cooperative advertising balance as of December 31, 2017 were to increase by one percent, the reserve for product discounts would increase and revenues would be reduced by $0.1 million. The Company's past results of operations have not been materially affected by a change in ~~the estimate of product discounts, and although~~these estimates. Although there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change these estimates in the future.

~~Product returns:~~ HBB products generally are not sold with the right of return. However, based on the Company's historical experience, a portion of KC and HBB products sold are estimated to be returned due to reasons such as buyer remorse, duplicate gifts received, product failure and excess inventory stocked by the customer which, subject to certain terms and conditions, the Company will agree to accept. The Company records estimated reductions to revenues at the time of sale based on this historical experience and the limited right of return provided to certain customers. If future trends were to change significantly from those experienced in the past, incremental reductions to revenues may result based on this new experience. If the Company's estimate of average return rates as of December 31, 2017 were to increase by one percent, the reserves for product returns would increase and revenues would be reduced by $0.1 million. The Company's past results of operations have not been materially affected by a change in the estimate of product returns and although there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change these estimates in the future.

Table of Contents


~~Item 7.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

Retirement ~~benefit plans:~~Benefit Plans: The Company maintains two defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods. ~~All eligible employees, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans.~~ The Company's policy is to periodically make contributions to fund the defined benefit pension plans within the range allowed by applicable regulations. The defined benefit pension plan assets consist primarily of publicly traded stocks and government and corporate bonds. There is no guarantee the actual return on the plans’ assets will equal the expected long-term rate of return on plan assets or that the plans will not incur investment losses.

The expected long-term rate of return on defined benefit plan assets reflects management’s expectations of long-term rates of return on funds invested to provide for benefits included in the projected benefit obligations. In establishing the expected long-term rate of return assumption for plan assets, the Company considers the historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans as well as a forward-looking rate of return. The historical and forward-looking rates of return for each of the asset classes used to determine the Company's estimated rate of return assumption are based upon the rates of return earned or expected to be earned by investments in the equivalent benchmark market indices for each of the asset classes.

Expected returns for the U.S. pension ~~plans~~plan are based on a calculated market-related value for U.S. pension plan assets. Under this methodology, asset gains and losses resulting from actual returns that differ from the Company's expected returns which are recognized ratably in the market-related value of assets over three years. Expected returns for the non-U.S. pension ~~plans~~plan are based on fair market value for non-U.S. pension plan assets.

The basis for the selection of the discount rate for each plan is determined by matching the timing of the payment of the expected obligations under the defined benefit plans ~~and health care plans~~ against the corresponding yield of high-quality corporate bonds of equivalent maturities.

Changes to the estimate of any of these factors could result in a material change to the Company's pension obligation causing a related increase or decrease in reported net operating results in the period of change in the estimate. Because the ~~2017~~2020 assumptions are used to calculate ~~2018~~2021 pension expense amounts, a one percentage-point change in the expected long-term rate of return on plan assets would result in a change in pension expense for ~~2018~~2021 of approximately $0.3 million for the plans. A one percentage-point change in the discount rate would result in a change in pension expense for ~~2018~~2021 by ~~approximately~~less than $0.1 million. A one percentage-point increase in the discount rate would have lowered the plans’ projected benefit obligation as of the end of ~~2017~~2020 by approximately ~~$2.0~~$1.7 million; while a one percentage-point decrease in the discount rate would have raised the plans’ projected benefit obligation as of the end of ~~2017~~2020 by approximately ~~$2.3~~$2.0 million.

~~See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's retirement benefit plans.~~

~~Self-insurance liabilities:~~ The Company is generally self-insured for product liability, environmental liability, medical claims and certain workers’ compensation claims. For product liability, catastrophic insurance coverage is retained for potentially significant individual claims. An estimated provision for claims reported and for claims incurred but not yet reported under the self-insurance programs is recorded and revised periodically based on industry trends, historical experience and management judgment. In addition, industry trends are considered within management's judgment for valuing claims. Changes in assumptions for such matters as legal judgments and settlements, inflation rates, medical costs and actual experience could cause estimates to change in the near term. Changes in any of these factors could materially change the Company's estimates for these self-insurance obligations causing a related increase or decrease in reported net operating results in the period of change in the estimate.

~~Inventory reserves:~~ HBB inventories are stated at the lower of cost or net realizable value. The first-in, first-out (“FIFO”) method is used for HBB's inventory. KC retail inventories are stated at the lower of cost or market using the retail inventory method. Adjustments to the carrying value are recorded for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. An impairment in value of one percent of net inventories would result in additional expense of approximately $1.3 million.

Table of Contents


~~Item 7.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

RESULTS OF OPERATIONS

~~Allowances for doubtful accounts:~~ The Company maintains allowances for doubtful accounts for estimated losses resulting from the failure of its customers to make required payments. These allowances are based on both recent trends of certain customers estimated to be a greater credit risk as well as general trends of the entire customer pool. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. An impairment in value of one percent of net accounts receivable would require an increase in the allowance for doubtful accounts and would result in additional expense of approximately $1.1 million.

~~Income taxes:~~ The U.S. operating results of the Company will be included in the consolidated federal income tax return filed by NACCO through the spin-off date. The Company's allocation of taxes through the spin-off date will be in accordance with the Tax Allocation Agreement. In general, the Tax Allocation Agreement between the Company and NACCO provides that federal income taxes are computed by the Company as if it had filed a tax return on a standalone basis calculated using the separate return method. Subsequent to the spin-off, the Company will file a separate federal tax return in the U.S. for the period subsequent to the spin-off date.

Tax law requires certain items to be included in the tax return at different times than the items are reflected in the financial statements. Some of these differences are permanent, such as expenses that are not deductible for tax purposes, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities using currently enacted tax rates. The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date. Management is required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted law and tax rates for the appropriate tax jurisdictions to determine the amount of such deferred tax assets and liabilities. Changes in the calculated deferred tax assets and liabilities may occur in certain circumstances, including statutory income tax rate changes, statutory tax law changes, or changes in the Company's structure or tax status.

The Company's tax assets, liabilities, and tax expense are supported by historical earnings and losses and the Company's best estimates and assumptions of future earnings. The Company assesses whether a valuation allowance should be established against the Company's deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates the Company is using to manage the underlying businesses. When the Company determines, based on all available evidence, that it is more likely than not that deferred tax assets will not be realized, a valuation allowance is established.

Since significant judgment is required to assess the future tax consequences of events that have been recognized in the Company's financial statements or tax returns, the ultimate resolution of these events could result in adjustments to the Company's financial statements and such adjustments could be material. The Company believes the current assumptions, judgments and other considerations used to estimate the current year accrued and deferred tax positions are appropriate. If the actual outcome of future tax consequences differs from these estimates and assumptions, due to changes or future events, the resulting change to the provision for income taxes could have a material impact on the Company's results of operations for Hamilton Beach Holding were as follows for the years ended December 31:

2020 Compared with 2019


	Year Ended December 31
	2020		% of Revenue		2019		% of Revenue		$ Change		% Change
Revenue	$	603,713	100.0	%	$	611,786	100.0	%	$	(8,073)	(1.3)	%
Cost of sales	465,059		77.0	%	483,234		79.0	%	(18,175)		(3.8)	%
Gross profit	138,654		23.0	%	128,552		21.0	%	10,102		7.9	%
Selling, general and administrative expenses	99,990		16.6	%	100,381		16.4	%	(391)		(0.4)	%
Amortization of intangible assets	1,249		0.2	%	1,377		0.2	%	(128)		(9.3)	%
Operating profit (loss)	37,415		6.2	%	26,794		4.4	%	10,621		39.6	%
Interest expense, net	1,998		0.3	%	2,975		0.5	%	(977)		(32.8)	%
Other expense (income), net	1,685		0.3	%	(358)		(0.1)	%	2,043		(570.7)	%
Income (loss) from continuing operations before income taxes	33,732		5.6	%	24,177		4.0	%	9,555		39.5	%
Income tax expense	9,665		1.6	%	9,084		1.5	%	581		6.4	%
Net income from continuing operations	24,067		4.0	%	15,093		2.5	%	8,974		59.5	%
Income (loss) from discontinued operations, net of tax	22,191		n/m		(28,600)		n/m		50,791		n/m
Net income (loss)	$	46,258			$	(13,507)			$	59,765


Effective income tax rate on continuing operations			28.7		%										37.6		%

The following table identifies the components of the change in revenue for 2020 compared with 2019:


	Revenue
2019	$	611,786
(Decrease) increase from:
Unit volume and product mix	(14,093)
Foreign currency	(4,219)
Average sales price	10,239
2020	$	603,713

Revenue- Revenue decreased $8.1 million, or 1.3%. While unprecedented demand continues for small kitchen appliances, the cutover to our new enterprise resource planning ("ERP") system during the third quarter of 2020 reduced shipping capabilities at the Company's US distribution center and ~~financial position.~~resulted in a significant shortfall in revenue during the third quarter. Despite a strong finish to 2020, which made up for a significant portion of the revenue shortfall in the third quarter, revenue decreased year over year as a result of lower volumes. The lower sales volume in the US consumer market is the result of the ERP cutover challenges, while lower volume in the international consumer and global commercial markets is attributable to the pandemic. The impact of lower volume was partially offset by higher average sales price driven primarily by product and customer mix. Foreign currency had a negative impact on revenue of $4.2 million.

~~On December 22, 2017, the U.S. federal government enacted the Tax Cuts and Jobs Act (the “Tax Act”)~~Gross profit - The increase in gross profit of $10.1 million, or 7.9%, ~~which significantly revises U.S. tax law. The Tax Act will positively impact the Company’s future effective income tax rate~~is primarily due to ~~the reduction~~sales of ~~the U.S. federal corporate tax rate~~higher margin products. As a percentage of revenue, gross profit margin increased from ~~35 percent~~21.0% to ~~21 percent, effective January 1, 2018.~~

~~In addition~~23.0% primarily due to ~~the reduction~~customer and product mix. Additionally, gross profit in ~~the U.S. federal corporate tax rate mentioned above, other significant changes to existing tax law include (1)~~2020 includes a ~~deduction received on dividends~~benefit of ~~foreign earnings with a related tax~~approximately $2.1 million for the deemed repatriation of unremitted foreign earnings; (2) limitations on the deductibility of certain executive compensation for publicly traded companies; (3) accelerated expensing of capital investment, subject to phase out beginning in 2023; (4) a new limitation on deductible interest expense; and (5) a new U.S. minimum tax on earnings of foreign subsidiaries.

tariff relief.

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~~Item 7.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

~~Subsequent~~Selling, general and administrative expenses - Included in selling, general and administrative expenses are charges related to unauthorized transactions at our Mexican subsidiaries of $1.9 million in 2020 compared with $6.9 million in 2019. Offsetting this decrease in 2020 is an increase in incentive compensation expense of $3.3 million primarily driven by stronger Company performance as well as an increase in legal, other third-party fees and consulting expenses primarily related to the ~~enactment~~accounting irregularities at our Mexican subsidiaries and the implementation of our new ERP system.

Other expense (income), net - Other expense in 2020 was $1.7 million due primarily to currency losses from the re-measurement of liabilities related to inventory purchases denominated in US dollars by HBB’s foreign subsidiaries. Other income in 2019 was $0.4 million and included currency gains of $0.4 million.

Income tax expense - The Company recognized income tax expense of $9.7 million on income from continuing operations before income taxes of $33.7 million, an effective tax rate of 28.7% in 2020 compared to income tax expense of $9.1 million on income from continuing operations before income taxes of $24.2 million, an effective tax rate of 37.6% in 2019. The higher effective tax rate in 2019 is attributable to non-cash charges to write-off unrealizable assets at our Mexican subsidiaries for which the corresponding tax benefit has been substantially offset by an increase in unrecognized tax benefits and $1.6 million of deferred tax expense related to a change in judgment regarding the valuation allowance recorded against the deferred tax assets of KC.

2019 Compared with 2018

The results of operations for Hamilton Beach Holding were as follows for the years ended December 31:


	Year Ended December 31
	2019		% of Revenue		2018		% of Revenue		$ Change		% Change
Revenue	$	611,786	100.0	%	$	630,082	100.0	%	$	(18,296)	(2.9)	%
Cost of sales	483,234		79.0	%	491,030		77.9	%	(7,796)		(1.6)	%
Gross profit	128,552		21.0	%	139,052		22.1	%	(10,500)		(7.6)	%
Selling, general and administrative expenses	100,381		16.4	%	104,121		16.5	%	(3,740)		(3.6)	%
Amortization of intangible assets	1,377		0.2	%	1,381		0.2	%	(4)		(0.3)	%
Operating profit	26,794		4.4	%	33,550		5.3	%	(6,756)		(20.1)	%
Interest expense, net	2,975		0.5	%	2,916		0.5	%	59		2.0	%
Other expense (income), net	(358)		(0.1)	%	149		—	%	(507)		(340.3)	%
Income from continuing operations before income taxes	24,177		4.0	%	30,485		4.8	%	(6,308)		(20.7)	%
Income tax expense	9,084		1.5	%	7,426		1.2	%	1,658		22.3	%
Net income from continuing operations	15,093		2.5	%	23,059		3.7	%	(7,966)		(34.5)	%
Loss from discontinued operations, net of tax	(28,600)		n/m		(5,361)		n/m		(23,239)		n/m
Net income (loss)	$	(13,507)			$	17,698			$	(31,205)



Effective income tax rate on continuing operations	37.6	%	24.4	%

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

The following table identifies the components of the ~~Tax Act,~~change in revenue for 2019 compared with 2018:


	Revenue
2018	$	630,082
(Decrease) increase from:
Unit volume and product mix	(19,613)
Average sales price	(1,688)
Foreign currency	3,005
2019	$	611,786

Revenue - Revenue decreased $18.3 million, or 2.9%. The decline is primarily due to lower sales volume in the ~~SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”)~~U.S. consumer, international consumer and global commercial markets. Globally, our ecommerce business grew 27%; however, these gains were more than offset by the adverse impact of tariffs, a loss of placements in the dollar store channel resulting from HBB's decision not to maintain very low margin business, ongoing foot traffic challenges at some retailers and other pressure points facing individual retail companies. Revenue in the global commercial market decreased due primarily to lower volume driven by the adverse impact of tariffs.

Gross profit - The decline in gross profit of $10.5 million, or 7.6%, ~~which provides~~is primarily due to lower sales volume. As a ~~measurement period~~percentage of uprevenue, gross profit margin declined from 22.1% to 21.0% primarily due to increased inbound freight expenses, the adverse impact of tariffs and unfavorable foreign currency movements.

Selling, general and administrative expenses - The decrease in selling, general and administrative expenses was mainly attributable to a $5.2 million decline in environmental expense due to the reduction to the environmental reserve at one ~~year after~~site of $3.2 million related to a change in the ~~enactment date~~expected type and extent of investigation and remediation activities and to a $1.5 million reduction in environmental expense due to the probable recovery of investigation and remediation costs associated with the same site from a responsible party in exchange for ~~companies~~release from all future obligations by that party. Additionally, advertising expenses declined $3.1 million and employee-related costs decreased $2.0 million due to ~~finalize~~reduced incentive compensation expense. These decreases were partially offset by a one-time charge of $3.2 million recorded in the ~~recognition~~second quarter of 2019 for a contingent loss related to patent litigation. Additionally, certain former employees of one of our Mexican subsidiaries engaged in unauthorized transactions with the Company’s Mexican subsidiaries and in doing so, expenditures were deferred on the balance sheet of the ~~income tax effects~~Company's Mexican subsidiaries beyond the period for which the costs pertained. Included in selling, general and administrative expenses are charges of ~~the Tax Act. As~~$6.9 million in 2019 compared with charges of $4.9 million in 2018 to write-off unrealizable assets created as a result of these unauthorized transactions.

Other expense (income), net - Other income in 2019 includes currency gains of $0.4 million compared with other expense in 2018 related to currency losses of $0.5 million as the ~~Tax Act and pursuant~~Mexican peso strengthened against the U.S. dollar.

Income tax expense - The Company recognized income tax expense of $9.1 million on income from continuing operations before income taxes of $24.2 million, an effective tax rate of 37.6% compared to ~~SAB 118, the Company recorded a provisional net~~income tax ~~charge~~expense of ~~$4.7~~$7.4 million, an effective tax rate of 24.4%. The increase in the ~~period ending December 31, 2017. The provisional expense~~effective tax rate is primarily ~~attributable~~due to $2.0 million of deferred tax expense related to a change in judgment regarding the ~~corporate rate reduction on existing~~valuation allowance recorded against certain deferred tax assets of KC. Additionally, certain former employees of one of our Mexican subsidiaries engaged in unauthorized transactions with the Company’s Mexican subsidiaries and ~~liabilities.~~in doing so expenditures were deferred on the balance sheet of the Mexican subsidiaries beyond the period for which the costs pertained. Included in selling, general and administrative expenses are non-cash charges to write-off unrealizable assets for which the ~~provisional income~~corresponding tax ~~charge is $0.4 million for excess executive renumeration expense expected to be under the Company's long-term incentive plan payments~~benefit has been substantially offset by an increase in ~~future years, as certain covered employee recipients are expected to exceed the $1 million disallowance threshold,~~unrecognized tax benefits.

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and $0.2 million for the net impact related to repatriation of unremitted foreign earnings. The ultimate impact of the Tax Act may differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions, additional regulatory guidance that may be issued, and the computation of state income taxes as there is uncertainty on conformity to the U.S. federal tax system following the Tax Act.Percentage Data)

~~CONSOLIDATED FINANCIAL SUMMARY~~LIQUIDITY AND CAPITAL RESOURCES

Hamilton Beach Brands Holding is an operating holding company for two separate businesses that operate in the consumer, commercial and specialty small appliances market (HBB) and the specialty retail market (KC). Hamilton Beach Holding includes the required intercompany eliminations between HBB and KC and certain federal tax attributes. Costs incurred as a stand-alone public entity are allocated to the HBB segment. The only material assets held by Hamilton Beach Holding are its investments in consolidated subsidiaries, and substantially all of itsCompany cash flows are provided by dividends paid or distributions made by its subsidiaries. The ~~cash to pay dividends to Hamilton Beach Holding’s stockholders is derived from these cash flows.~~only material assets held by it are the investments in consolidated subsidiaries. As a result, certain statutory limitations or regulatory or financing agreements could affect the levels of distributions allowed to be made by its subsidiaries. ~~See Note 6~~Hamilton Beach Brands Holding Company has not guaranteed any of the obligations of its subsidiaries.

HBB's principal sources of cash to fund liquidity needs are: (i) cash generated from operations and (ii) borrowings available under the revolving credit facility, as defined below. HBB's primary use of funds consists of working capital requirements, operating expenses, capital expenditures, and payments of principal and interest on debt. At December 31, 2020, the Company had cash and cash equivalents for continuing operations of $2.4 million, compared to $2.1 million at December 31, 2019.

The ongoing global COVID-19 pandemic has resulted in governments around the world implementing stringent measures to help control the spread of the virus, including business shutdowns and limitations, travel restrictions, border closings, restrictions on public gatherings and shelter-in-place restrictions. This has negatively impacted the global economy, disrupted financial markets and resulted in increased unemployment levels, all of which have negatively impacted various industries. We believe we are well positioned to effectively navigate the COVID-19 pandemic for a number of reasons. Demand for certain retail small kitchen appliances in the US remains strong as consumers prepare more food and beverages at home. We are managing discretionary expenses, and have sufficient availability under the revolving credit facility to meet our future anticipated obligations. We have demonstrated effective management of net working capital which was a major contributor to improved borrowing activity during the year, with average debt down $11.6 million compared to the ~~Consolidated Financial Statements~~prior year ended December 31, 2019. Additionally, the Company is no longer impacted by KC’s losses and negative cash flow. We will continue to work with our customers, employees, suppliers and communities to address the impacts of COVID-19 and closely monitor our liquidity.

The following table presents selected cash flow information from continuing operations:


	Year Ended December 31
	(In thousands)
	2020		2019		2018
Net cash provided by (used for) operating activities from continuing operations	$	(27,934)	$	222	$	17,955
Net cash provided by (used for) investing activities from continuing operations	$	(3,812)	$	(4,122)	$	(7,759)
Net cash provided by (used for) financing activities from continuing operations	$	34,180	$	1,062	$	(9,255)

December 31, 2020 Compared with December 31, 2019

Operating activities - Net cash used for operating activities was $27.9 million compared to cash provided by operating activities of $0.2 million in ~~this Form 10-K~~2019 primarily due to an increase of $59.9 million in net working capital. Trade receivables increased primarily due to increased fourth quarter sales in 2020 compared with prior year. The increase in inventory and accounts payable are primarily due to the earlier build of inventory to offset the impacts of longer lead times driven by shipping congestion in our supply chain from China, as well as to support expected strong demand in the first half of 2021.

Investing activities - Net cash used for ~~further discussion of certain of these limitations.~~investing activities was relatively flat in 2020 compared to 2019. Capital spending for internal-use software development costs was lower in 2020 as the Company implemented its new ERP system in July 2020. The decline in spending on internal-use software was offset by other investments.

~~Selected consolidated results of Hamilton Beach Holding were as follows:~~

Financing activities - Net cash provided by financing activities increased $33.1 million in 2020 primarily due to an increase in HBB's net borrowing activity on the revolving credit facility. The increase in borrowings was used to fund net working capital.

2017 2016 2015
Revenues
HBB $ 615,071
$ 605,170
$ 620,977
KC 128,520
144,351
150,988
Eliminations (2,842 ) (4,164 ) (4,103 )
Consolidated revenues $ 740,749
$ 745,357
$ 767,862

Operating profit
HBB $ 41,487
$ 43,033
$ 34,801
KC (3,418 ) 376
165
Eliminations 66
(35 ) 588
Consolidated operating profit $ 38,135
$ 43,374
$ 35,554

Net income

HBB $ 21,117
$ 26,557
$ 19,749
KC (3,272 ) (355 ) (420 )
Eliminations 60
(23 ) 382
Consolidated net income $ 17,905
$ 26,179
$ 19,711

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in ~~ASC 606, "Revenue Recognition - Revenue from Contracts with Customers," which supersedes most current revenue recognition guidance, including industry-specific guidance,~~Thousands, Except Per Share and requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to customers and provide additional disclosures. The effective date for nonpublic entities is annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. The Company will adopt the standard on January 1, 2018.Percentage Data)

The Company will use the modified retrospective method with the cumulative effect of initially applying the standard recognized as an adjustment to equity. The Company completed the execution of its project plan with respect to its implementation of this standard, including identification of revenue streams and review of contracts and procedures currently in place. Hamilton Beach Holding’s revenue is primarily generated from the sale of finished product to customers. Those sales are recognized at a single point in time when ownership, risks and rewards transfer. The amount and timing of revenue recognition is not materially impacted by the new standard, thus no cumulative adjustment will be recognized upon adoption. As the amount and timing of revenue recognition is not materially impacted by the new standard, the adoption of the standard is not expected to have a material impact to the Company’s financial position, results of operations or cash flows. The adoption of this guidance will result in increased disclosures to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which requires an entity to recognize assets and liabilities for the rights and obligations created by leased assets. For nonpublic entities, the amendments are effective for fiscal years beginning after December 15, ~~2019,~~2021, and interim periods within fiscal years beginning after December 15, ~~2020.~~2022. Early adoption is permitted. The Company is planning to adopt ASU 2016-02 ~~for its fiscal year ending December 31, 2020~~when required and is currently evaluating to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures.

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~~Item 7.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~HAMILTON BEACH BRANDS HOLDING COMPANY~~

~~(Tabular Amounts in Thousands, Except Per Share and Percentage Data)~~

In ~~February 2018,~~June 2016, the FASB issued ASU ~~2018-02, "Income Statement~~2016-13, “Financial Instruments - ~~Reporting Comprehensive Income~~Credit Losses (Topic ~~220)~~326),"~~. The guidance in ASU 2018-02 allows~~ which requires an entity to ~~elect to reclassify~~recognize credit losses as an allowance rather than as a write-down. For nonpublic entities, the ~~stranded tax effects related to the Tax Act from accumulated other comprehensive income into retained earnings. ASU 2018-02 is~~amendments are effective for fiscal years beginning after December 15, ~~2018, with early~~2021, and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is ~~currently evaluating when it will~~planning to adopt ASU ~~2018-02~~2016-03 for its year ending December 31, 2022 and ~~how and~~is currently evaluating to what extent ASU ~~2018-02~~2016-13 will affect the Company's financial position, results of operations, cash flows and related disclosures.

FORWARD-LOOKING STATEMENTS

The statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These ~~forward-looking~~forward looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Such risks and uncertainties ~~with respect to each subsidiary's operations~~ include, without limitation:

~~HBB:~~ (1) the Company’s ability to ship products to meet the anticipated increase in demand, (2) the Company’s ability to successfully manage the anticipated transportation constraints, (3) the unpredictable nature of the COVID-19 pandemic and its potential impact on our business; (4) changes in the sales prices, product mix or levels of consumer purchases of small electric and specialty housewares appliances, ~~(2)~~(5) changes in consumer retail and credit markets, including the increasing volume of transactions made through third-party internet sellers, ~~(3)~~(6) bankruptcy of or loss of major retail customers or suppliers, ~~(4)~~(7) changes in costs, including transportation costs, of sourced products, ~~(5)~~(8) delays in delivery of sourced products, ~~(6)~~(9) changes in or unavailability of quality or cost effective suppliers, ~~(7)~~(10) exchange rate fluctuations, changes in the import tariffs and monetary policies and other changes in the regulatory climate in the countries in which HBB buys, operates and/or sells products, ~~(8)~~(11) the impact of tariffs on customer purchasing patterns, (12) product liability, regulatory actions or other litigation, warranty claims or returns of products, ~~(9)~~(13) customer acceptance of, changes in costs of, or delays in the development of new products, ~~(10)~~(14) increased competition, including consolidation within the industry, ~~(11)~~(15) shifts in consumer shopping patterns, gasoline prices, weather conditions, the level of consumer confidence and disposable income as a result of economic conditions, unemployment rates or other events or conditions that may adversely affect the level of customer purchases of ~~HBB's~~HBB products, ~~(12)~~(16) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, (17) the result of shareholder or governmental actions relating to the restatement of our financial statements and ~~(13)~~accounting and legal fees that we may incur in connection with the actual impact of the Tax Act may affect future earnings as the amounts reflected in 2017 are preliminary estimates and exact amounts will not be determined until a later date, and there may be other judicial or regulatory interpretations of the Tax Act that may also impact these estimates and future financial results.

~~KC:~~ (1) decreased levels of consumer visits to brick and mortar stores, (2) increased competition, including through online channels, (3) shifts in consumer shopping patterns, gasoline prices, weather conditions, the level of consumer confidence and disposable incomerestatement, (18) difficulties arising as a result of ~~economic conditions, unemployment rates~~our implementation, integration or operation of an enterprise resource planning system in the US, (19) our ability to successfully remediate the material weaknesses in our internal control over financial reporting disclosed in Item 9A of the Annual Report on Form 10-K within the time periods and in the manner currently anticipated, additional material weaknesses or other ~~events or conditions~~deficiencies that may ~~adversely affect the number of customers visiting Kitchen Collection~~^® ~~stores, (4) changes~~arise in the ~~sales prices, product mix~~future or our ability to maintain an effective system of internal controls, and (20) other risk factors, including those described in the Company's filings with the Securities and Exchange Commission, including, but not limited to, this Annual Report on Form 10-K for the year ended December 31, 2020. Furthermore, the situation surrounding COVID-19 remains fluid and the potential for a material impact on the Company’s results of operations, financial condition, liquidity, and stock price increases the longer the virus impacts activity levels in the US and globally. For this reason, the Company cannot reasonably estimate with any degree of ~~consumer purchases~~certainty the future impact COVID-19 may have on its results of ~~kitchenware~~operations, financial position, liquidity and ~~small electric appliances, (5) changes in costs~~stock price. The extent of ~~inventory, including transportation costs, (6) delays in delivery or~~any impact will depend on the ~~unavailability of inventory, (7) customer acceptance~~extent of new ~~products, (8)~~outbreaks, the ~~anticipated~~extent to which new shutdowns may be needed, the nature of government public health guidelines and the public’s adherence to those guidelines, the impact of government economic relief on the ~~opening~~US economy, unemployment levels, the success of ~~new stores,~~businesses reopening fully, the ~~ability to renegotiate existing leases~~timing for proven treatments and ~~effectively~~the availability of vaccines for COVID-19, consumer confidence and efficiently close under-performing stores, (9) changes in the import tariffs and monetary policies and other changes in the regulatory climate in the countries in which KC buys, operates and/or sells products, and (10) the actual impact of the Tax Act may affect future earnings as the amounts reflected in 2017 are preliminary estimates and exact amounts will not be determined until a later date, and there may be other judicial or regulatory interpretations of the Tax Act that may also impact these estimates and future financial results.

demand for our products.

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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

~~The Company's subsidiaries,~~ HBB ~~and KC, have entered~~enters into certain financing arrangements that require interest payments based on floating interest rates. As such, the Company's financial results are subject to changes in the market rate of interest. There is an inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and business financing requirements. To reduce the exposure to changes in the market rate of interest, HBB has entered into interest rate swap agreements for a portion of its floating rate financing arrangements. The Company does not enter into interest rate swap agreements for trading purposes. Terms of the interest rate swap agreements require ~~the subsidiaries~~HBB to receive a variable interest rate and pay a fixed interest rate. ~~See Note 2 and Note 7 to the Consolidated Financial Statements in this Form 10-K.~~

For purposes of risk analysis, the Company uses sensitivity analysis to measure the potential loss in fair value of financial instruments sensitive to changes in interest rates. The Company assumes that a loss in fair value is an increase to its liabilities. The fair value of the Company's interest rate swap agreements was a ~~net receivable~~payable of ~~$0.9~~$1.2 million at December 31, ~~2017.~~2020. A hypothetical 10% decrease in interest rates would cause a decrease of ~~$0.2~~$0.1 million in the fair value of interest rate swap agreements and the resulting fair value would be a ~~receivable~~payable of ~~$0.7~~$1.2 million. Additionally, a hypothetical 10% increase in interest rates would not have a material impact to the Company's interest expense, net of ~~$1.8~~$2.0 million at December 31, ~~2017.~~2020.

FOREIGN CURRENCY EXCHANGE RATE RISK

HBB operates internationally and enters into transactions denominated in foreign currencies, principally the Canadian dollar, the Mexican peso and, to a lesser extent, the Chinese yuan and Brazilian real. As such, HBB's financial results are subject to the variability that arises from exchange rate movements. The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of ~~revenues,~~revenue, expenses, assets and liabilities. The potential impact of currency fluctuation increases as international expansion increases.

HBB uses forward foreign currency exchange contracts to partially reduce risks related to transactions denominated in foreign currencies and not for trading purposes. These contracts generally mature within twelve months and require HBB to buy or sell the functional currency in which the applicable subsidiary operates and buy or sell U.S. dollars at rates agreed to at the inception of the contracts. ~~See Note 2 and Note 7 to the Consolidated Financial Statements in this Form 10-K.~~

For purposes of risk analysis, the Company uses sensitivity analysis to measure the potential loss in fair value of financial instruments sensitive to changes in foreign currency exchange rates. The Company assumes that a loss in fair value is either a decrease to its assets or an increase to its liabilities. The fair value of the Company's foreign currency exchange contracts was a net ~~receivable~~payable of ~~$0.2~~$0.5 million at December 31, ~~2017.~~2020. Assuming a hypothetical 10% weakening of the U.S. dollar ~~compared with the Canadian dollar~~ at December 31, ~~2017,~~2020, the fair value of foreign currency-sensitive financial instruments, which represents forward foreign currency exchange contracts, would be decreased by ~~$1.3~~$1.9 million compared with its fair value at December 31, ~~2017. It is important to note that the change in fair value indicated in this sensitivity analysis would be somewhat offset by changes in the fair value of the underlying receivables and payables.~~2020.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is set forth in the Financial Statements and Supplementary Data contained in Part IV of this Form 10-K and is hereby incorporated herein by reference to such information.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There were no disagreements with accountants on accounting and financial disclosure for the three-year period ended December 31, ~~2017~~.2020 that would require disclosure pursuant to this Item 9.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of ~~disclosure controls~~Disclosure Controls and ~~procedures:~~ ~~An evaluation was carried out under the supervision and with the participation of the Company's~~Procedures: As required by Exchange Act Rule 13a-15(b), our management, including ~~the principal executive officer~~our Chief Executive Officer and ~~the principal financial officer,~~Chief Financial Officer, conducted an evaluation of the effectiveness of ~~the Company's~~our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report. Based on that evaluation, ~~these officers have~~our Chief Executive Officer and Chief Financial Officer concluded that ~~the Company's~~our disclosure controls and procedures ~~are effective.~~

~~Table~~were not effective as of ~~Contents~~

~~Management's report on~~December 31, 2020 because of the material weaknesses in our internal control over financial ~~reporting:~~reporting described in the "Management's Report on Internal Control over Financial Reporting." Notwithstanding the identified material weaknesses, management, including our Chief Executive Officer and Chief Financial Officer have determined, based on the procedures we have performed, that the consolidated financial statements included in this Annual

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Report on Form 10-K present fairly, in all material respects, our financial condition, results of operations and cash flows at December 31, 2020 and for the periods presented in accordance with U.S. GAAP.

Management’s Report on Internal Control over Financial Reporting: Management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of management, including ~~the principal executive officer~~our Chief Executive Officer and ~~principal financial officer,~~our Chief Financial Officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control —- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 ~~framework)~~Framework). Based on this evaluation, ~~under the framework,~~ management concluded that ~~the Company's~~we did not maintain effective internal control over financial reporting ~~was effective~~ as of December 31, ~~2017~~. 2020 due to the material weaknesses as described below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Mexican subsidiaries

As of December 31, 2019, we identified two material weaknesses at our Mexican subsidiaries related to (1) the design and operating effectiveness of review controls for account reconciliations and manual journal entries and (2) the design and operating effectiveness of transaction level controls over authorization of spending with vendors, adjusting product costing and selling prices, new customer setup and accounting for price concessions with our customers.The material weaknesses at our Mexican subsidiaries as of December 31, 2019 were not remediated during our fiscal year ended December 31, 2020.

We are committed to remediating the control deficiencies that gave rise to the material weaknesses. Management is responsible for implementing changes and improvements to internal control over financial reporting and for remediating the control deficiencies that gave rise to the material weaknesses.

With oversight from the Audit Review Committee, we have taken significant steps to remediate the internal control deficiencies at our Mexican subsidiaries by redesigning our controls, many of which operated for the first time during the fourth quarter. Our efforts have consisted primarily of strengthening our organization and designing a suite of controls that address the material weaknesses. Because many of our controls operated for the first time during the fourth quarter, we have not had a sufficient period of time to demonstrate operating effectiveness in 2020.Until the remediation actions are fully implemented and the operational effectiveness of related internal controls is validated through testing, the material weaknesses described above will continue to exist.

Income taxes

Management determined that we did not design and maintain effective controls over our income tax accounting process to identify and accurately measure deferred tax assets, deferred tax liabilities and income taxes payable and the related income tax expense. While the control deficiency did not result in a misstatement of our previously issued consolidated financial statements, the control deficiency could result in a material misstatement of the aforementioned account balances or disclosures that would result in a material misstatement in our annual or interim consolidated financial statements that would not be prevented or detected. Our management has concluded that the deficiency constitutes a material weakness in our internal control over financial reporting.

With oversight from the Audit Review Committee, we have developed a plan to remediate the material weakness in internal control over financial reporting related to our income taxes accounting process, which consists of:

a.Reviewing the organization structure, resources, processes, and controls in place to measure and record income taxes to enhance the effectiveness of the design and operation of those controls;

b.Enhancing monitoring activities related to income taxes; and

c.Evaluating and enhancing the level of precision in the management review controls related to income taxes.

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We expect to implement the remediation actions in 2021. Until the remediation actions are fully implemented and the operational effectiveness of related internal controls is validated through testing, the material weakness described above will continue to exist.

We are committed to achieving and maintaining a strong internal control environment and believe the remediation measures will strengthen our internal control over financial reporting and remediate the material weakness identified.

The Company's effectiveness of internal control over financial reporting as of December 31, ~~2017~~2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report, which is included in Item 15 of this Form 10-K and incorporated herein by reference.

Changes in ~~internal control:~~Internal Control over Financial Reporting: There have been no changes in the Company's internal control over financial reporting, that occurred during the fourth quarter of ~~2017,~~2020, other than described above in "Management's Report on Internal Control over Financial Reporting", that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Item 9B. OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to Directors of the Company will be set forth in the ~~2018~~2021 Proxy Statement under the subheadings “Part II — Proposals To Be Voted On At The ~~2018~~2021 Annual Meeting — Proposal 1 — Election of Directors — Director Nominee Information,” which information is incorporated herein by reference.

Information with respect to the audit review committee and the audit review committee financial expert will be set forth in the ~~2018~~2021 Proxy Statement under the ~~subheading~~subheadings “Part I — Corporate Governance Information — ~~Directors' Meetings~~Board Committees,” and “Part I — Corporate Governance Information — Description of Committees,” which information is incorporated herein by reference.

Information with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 by the Company's Directors, executive officers and holders of more than ten percent of the Company's equity securities will be set forth in the ~~2018~~2021 Proxy Statement under the subheading “Part IV — Other Important Information — Section 16(a) Beneficial Ownership Reporting Compliance,” which information is incorporated herein by reference.

Information regarding the executive officers of the Company is included in this Form 10-K as Item 44A of Part I as permitted by Instruction 3 to Item 401(b) of Regulation S-K.

The Company has adopted a code of business conduct and ethics applicable to all Company personnel, including the principal executive officer, principal financial officer, principal accounting officer or controller, or other persons performing similar functions. The code of business conduct and ethics, entitled the “Code of Corporate Conduct,” is posted on the Company's website at ~~www.hamiltonbeachbrands.com under “Governance.”~~www.hamiltonbeachbrands.com/investors/corporate-governance.

Item 11. EXECUTIVE COMPENSATION

Information with respect to executive compensation will be set forth in the ~~2018~~2021 Proxy Statement under the headings “Part III — Executive Compensation Information” which information is incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS

Information with respect to security ownership of certain beneficial owners and management will be set forth in the ~~2018~~2021 Proxy Statement under the subheading “Part IV — Other Important Information — Beneficial Ownership of Class A Common and Class B Common,” which information is incorporated herein by reference.

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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to certain relationships and related transactions will be set forth in the ~~2018~~2021 Proxy Statement under the subheadings “Part I — Corporate Governance Information — Review and Approval of Related Person Transactions,” which information is incorporated herein by reference.

~~Table of Contents~~

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to principal accountant fees and services will be set forth in the ~~2018~~2021 Proxy Statement under the heading “Part II — Proposals To Be Voted On At The ~~2018~~2021 Annual Meeting — Proposal 24 — Ratification of the Appointment of Ernst & Young LLP as the Company's Independent Registered Public Accounting Firm for ~~2018,~~2021,” which information is incorporated herein by reference.

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Documents that are filed as part of this report

The response to Item 15(a)(1) is set forth beginning at page F-2 of this Form 10-K.

(a)(2) Financial Statement Schedules

The response to Item 15(a)(2) is set forth beginning at page ~~F-2~~F-37 of this Form 10-K.

(a)(3) and (b) Exhibits required by Item 601 of Regulation S-K

The response to Item 15(a)(3) and (b) is set forth as follows:

(2) Plan of acquisition, reorganization, arrangement, liquidation or succession.



2.1						Separation Agreement, dated as of September 29, 2017, between NACCO Industries, Inc. and Hamilton Beach Brands Holding Company is incorporated by reference to Exhibit 10.40 of Hamilton Beach Brands Holding Company's Current Report on Form 8-K, filed on October 4, 2017.

(3) Articles of Incorporation and By-laws.



3.1						Amended and Restated Certificate of Incorporation of Hamilton Beach Brands Holding Company (incorporated herein by reference to Exhibit 3.1 to the Hamilton Beach Brands Holding Company Registration Statement on Form 8-A, filed by Hamilton Beach Brands Holding Company on September 22, 2017, Commission File Number 000-55845).
3.2						Amended and Restated Bylaws of Hamilton Beach Brands Holding Company (incorporated herein by reference to Exhibit 3.2 to the Hamilton Beach Brands Holding Company Registration Statement on Form 8-A, filed by Hamilton Beach Brands Holding Company on September 22, 2017, Commission File Number 000-55845).

(4) Instruments defining the rights of security holders, including indentures.



4.1						Specimen of Hamilton Beach Brands Holding Company Class A Common Stock certificate, is incorporated by reference to Exhibit 4.1 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
4.2						Specimen of Hamilton Beach Brands Holding Company Class B Common Stock certificate, is incorporated by reference to Exhibit 4.2 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
4.3						Description of Registrant's Securities, is incorporated by reference to Exhibit 4.3 of Hamilton Beach Brands Holding Company's Current Report on Form 10-K, filed on February 26, 2020

~~Table of Contents~~

(10) Material Contracts.



10.1						Transition Services Agreement, dated as of September 29, 2017, between NACCO Industries, Inc. and Hamilton Beach Brands Holding Company, is incorporated by reference to Exhibit 10.2 of Hamilton Beach Brands Holding Company's Current Report on Form 8-K, filed on October 4, 2017.
10.2						Amendment No. 1 to the Transition Services Agreement between NACCO Industries, Inc. and Hamilton Beach Brands Holding Company, made and entered into effective as of September 29, 2018, is incorporated by reference to Exhibit 10.34 of Hamilton Beach Brands Holding Company's Current Report on Form 10-K, filed on March 6, 2019.
10.3						Amendment No. 2 to the Transition Services Agreement between NACCO Industries, Inc. and Hamilton Beach Brands Holding Company, made and entered into effective as of December 18, 2018, is incorporated by reference to Exhibit 10.35 of Hamilton Beach Brands Holding Company's Current Report on Form 10-K, filed on March 6, 2019.
10.4						Tax Allocation Agreement, dated as of September 29, 2017, between NACCO Industries, Inc. and Hamilton Beach Brands Holding Company, is incorporated by reference to Exhibit 10.3 of Hamilton Beach Brands Holding Company's Current Report on Form 8-K, filed on October 4, 2017.

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~~10.3~~10.5			Stockholders' Agreement, dated as of September 29, 2017, among Hamilton Beach Brands Holding Company, the other signatories thereto and Hamilton Beach Brands Holding Company, as depository, is incorporated by reference to Exhibit 10.4 of Hamilton Beach Brands Holding Company's Current Report on Form 8-K, filed on October 4, 2017.
~~10.4~~10.6			Amendment to Stockholder's Agreement, dated as of February 14, 2020 and effective February 24, 2020, among the depository, Hamilton Beach Brands Holding Company, the new Participating Stockholder signatories thereto and the Participating Stockholders under the Stockholders’ Agreement, dated as of September 29, 2017.
10.7			Amendment to Stockholders’ Agreement, dated as of December 21, 2020, by and between the Depository, the Issuer, the new Participating Stockholders and the Participating Stockholders is incorporated by reference to Exhibit 19 to the Participating Stockholders’ Schedule 13D/A, filed by the Participating Stockholders on February 12, 2021, Commission File Number 005-90132
10.8			Transfer Restriction Agreement, dated as of September 29, 2017, by and among the Issuer, NACCO and the signatories thereto, is incorporated by reference to Exhibit 2 of Schedule 13D, filed on October 6, 2017.
10.5*		The Retirement Benefit Plan for Alfred M. Rankin, Jr. (Amended and Restated Effective as of January 1, 2014) (incorporated herein by reference to Exhibit 10.2 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on February 14, 2014, Commission File Number 1-9172).
10.6*	NACCO Industries, Inc. Unfunded Benefit Plan (Amended and Restated Effective as of January 1, 2014) (incorporated herein by reference to Exhibit 10.3 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on February 14, 2014, Commission File Number 1-9172).
10.7*	NACCO Industries, Inc. Non-Employee Directors’ Equity Compensation Plan (Amended and Restated May 9, 2017) (incorporated by reference to Exhibit 10.1 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on May 10, 2017, Commission File Number 1-9172).
10.8*	NACCO Industries, Inc. Executive Long-Term Incentive Compensation Plan (Amended and Restated March 1, 2017) (incorporated by reference to Exhibit 10.2 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on May 10, 2017, Commission File Number 1-9172).
10.9*	Form of Cashless Exercise Award Agreement for the NACCO Industries, Inc. Executive Long-Term Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the NACCO Industries, Inc. Quarterly Report on Form 10-Q, filed by NACCO Industries, Inc. on August 1, 2017, Commission File Number 1-9172).
10.10*	Form of Non-Cashless Exercise Award Agreement for the NACCO Industries, Inc. Executive Long-Term Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.2 to the NACCO Industries, Inc. Quarterly Report on Form 10-Q, filed by NACCO Industries, Inc. on August 1, 2017, Commission File Number 1-9172).
10.11*	NACCO Industries, Inc. Supplemental Executive Long-Term Incentive Bonus Plan (Amended and Restated March 1, 2012) (incorporated herein by reference to Appendix B to the NACCO Industries, Inc. Definitive Proxy Statement, filed by NACCO Industries, Inc. on March 16, 2012, Commission File Number 1-9172).
10.12*	Form of Award Agreement for the NACCO Industries, Inc. Supplemental Executive Long-Term Incentive Bonus Plan (incorporated by reference to Exhibit 10.8 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on September 17, 2012, Commission File Number 1-9172).
10.13*	NACCO Industries, Inc. Executive Excess Retirement Plan (Effective as of September 28, 2012) (incorporated by reference to Exhibit 10.2 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on September 17, 2012, Commission File Number 1-9172).

~~Table of Contents~~


10.9
10.14*	NACCO Industries, Inc. Annual Incentive Compensation Plan (Effective as of September 28, 2012) (incorporated herein by reference to Appendix A to the NACCO Industries, Inc. Definitive Proxy Statement, filed by NACCO Industries, Inc. on March 22, 2013, Commission File Number 1-9172).
10.15*	Hamilton Beach Brands, Inc. Long-Term Incentive Compensation Plan (Amended and Restated Effective March 1, 2015) is incorporated herein by reference to Exhibit 10.2 to NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on May 18, 2015, Commission File Number 1-9172.
10.16*	The Hamilton Beach Brands, Inc. Annual Incentive Compensation Plan (Effective January 1, 2014) (incorporated herein by reference to Exhibit 10.1 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on May 9, 2014, Commission File Number 1-9172).
10.17*	The Hamilton Beach Brands, Inc. Excess Retirement Plan (As Amended and Restated Effective January 1, 2015) (incorporated herein by reference to Exhibit 10.71 to the NACCO Industries, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2014, Commission File Number 1-9172).
10.18*	Amendment No.1 to The Hamilton Beach Brands, Inc. Excess Retirement Plan (As Amended and Restated Effective January 1, 2015) (incorporated herein by reference to Exhibit 10.77 to the NACCO Industries, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2015, Commission File Number 1-9172).
~~10.19~~	Credit Agreement, dated as of April 29, 2010, among The Kitchen Collection, Inc., the borrowers and guarantors thereto, Wells Fargo Retail Finance, LLC and the other lenders thereto is incorporated herein by reference to Exhibit 10.27 to the NACCO Industries, Inc. Quarterly Report on Form 10-Q/A, filed by NACCO Industries, Inc. on March 20, 2013, Commission File Number 1-9172.
~~10.20~~10.10		First Amendment to Credit Agreement, dated as of August 7, 2012, among The Kitchen Collection, LLC, as successor to The Kitchen Collection, Inc., the borrowers and guarantors thereto, Wells Fargo Bank, National Association, as successor to Wells Fargo Retail Finance, LLC, and the other lenders thereto is incorporated herein by reference to Exhibit 10.28 to the NACCO Industries, Inc. Quarterly Report on Form 10-Q/A, filed by NACCO Industries, Inc. on March 20, 2013, Commission File Number 1-9172.
~~10.21~~10.11		Second Amendment to Credit Agreement, dated as of September 19, 2014, among The Kitchen Collection, LLC, as successor to The Kitchen Collection, Inc., the borrowers and guarantors thereto, Wells Fargo Bank, National Association, as successor to Wells Fargo Retail Finance, LLC, is incorporated herein by reference to Exhibit 10.1 to NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on September 19, 2014, Commission File Number 1-9172.
~~10.22~~10.12		Third Amendment to Credit Agreement by and among The Kitchen Collection, LLC, as Lead Borrower, Borrowers hereto, Guarantors hereto, Lenders hereto and Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and Swing Line Lender, dated as of October 20, 2017 is incorporated by reference to Exhibit 10.13 of the Hamilton Beach Brands Holding Company’s Form 10-Q filed on November 1, 2017.
10.13		Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, Wells Fargo Capital Finance, LLC, as Sole Lead Arranger and Sole Lead Bookrunner, the Lenders that are Parties thereto as the Lenders, Hamilton Beach Brands, Inc. (as US Borrower), and Hamilton Beach Brands Canada, Inc. (as Canadian Borrower), as Borrowers, dated as of May 31, 2012 is incorporated herein by reference to Exhibit 10.1 to NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on June 6, 2012, Commission File Number 1-9172.
~~10.23~~10.14		Amended and Restated Guaranty and Security Agreement, dated as of May 31, 2012, among Hamilton Beach Brands, Inc. and Hamilton Beach, Inc., as Grantors, and Wells Fargo Bank, National Association, as Administrative Agent is incorporated herein by reference to Exhibit 10.2 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on June 6, 2012, Commission File Number 1-9172.
~~10.24~~10.15		Amended and Restated Canadian Guarantee and Security Agreement, dated as of May 31, 2012, among Hamilton Beach Brands Canada, Inc., as Grantor, and Wells Fargo Bank, National Association, as Administrative Agent is incorporated herein by reference to Exhibit 10.3 to the NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on June 6, 2012, Commission File Number 1-9172.
~~10.25~~10.16		Amendment No.1 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc. (as US Borrower), and Hamilton Beach Brands Canada, Inc. (as Canadian Borrower), as Borrowers, dated as of July 29, 2014 is incorporated herein by reference to Exhibit 10.1 to the NACCO Industries, Inc. Quarterly Report on Form 10-Q, filed by NACCO Industries, Inc. on July 30, 2014, Commission File Number 1-9172.
~~10.26~~10.17		Amendment No.2 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc. (as US Borrower), and Hamilton Beach Brands Canada, Inc. (as Canadian Borrower), as Borrowers, dated as of November 20, 2014 is incorporated herein by reference to Exhibit 10.66 to NACCO Industries, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2014, Commission File Number 1-9172.
~~10.27~~10.18		Amendment No. 3 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc. (as Parent), and Weston Brands, LLC (as Weston) (collectively referred to as US Borrowers), and Hamilton Beach Brands Canada, Inc. (as Canadian Borrower), dated December 23, 2015 is incorporated herein by reference to Exhibit 10.72 to the NACCO Industries, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2015, Commission File 1-9172.
~~10.28~~10.19		Amendment No. 4 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc. (as Parent), and Weston Brands, LLC (as Weston) (collectively referred to as US Borrowers), and Hamilton Beach Brands Canada, Inc. (as Canadian Borrower), dated June 30, 2016 is incorporated herein by reference to Exhibit 10.1 to NACCO Industries, Inc. Quarterly Report on Form 10-Q, file by NACCO Industries, Inc. on August 2, 2016, Commission File Number I-9172.
~~10.29~~10.20		Amendment No. 5 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc. (as Parent), and Weston Brands, LLC (as Weston) (collectively referred to as US Borrowers), and Hamilton Beach Brands Canada, Inc. (as Canadian Borrower), dated September 13, 2017, is incorporated by reference to Exhibit 10.29 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.

4530

F-18

Gross Carrying
Amount Accumulated
Amortization Net
Balance
Balance at December 31, 2017
HBB:
Customer relationships $ 5,760
$ (2,920 ) $ 2,840
Trademarks 3,100
(608 ) 2,492
Other intangibles 1,240
(672 ) 568
$ 10,100
$ (4,200 ) $ 5,900

Balance at December 31, 2016
HBB:
Customer relationships $ 5,760
$ (1,960 ) $ 3,800
Trademarks 3,100
(408 ) 2,692
Other intangibles 1,240
(450 ) 790
$ 10,100
$ (2,818 ) $ 7,282

~~F-14~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

Due to the dissolution of KC, there were no assets or liabilities associated with KC as of December 31, 2020. The major classes of assets and liabilities included as part of discontinued operations as of December 31, 2019 are as follows:


	December 31
		2019
	(In thousands)
Assets
Cash and cash equivalents		$	5,022


Prepaid expenses and other current assets		361
Current assets of discontinued operations		$	5,383


Deferred income taxes		614

Non-current assets of discontinued operations		$	614

Liabilities
Accounts payable		$	4,594


Lease termination liability		17,248
Other current liabilities		7,881
Current liabilities of discontinued operations		$	29,723

Neither Hamilton Beach Brands Holding Company nor HBB has guaranteed any obligations of KC.

NOTE 3 - Property, Plant and Equipment, Net

Property, plant and equipment, net includes the following:


	December 31
	2020		2019
Land	$	226	$	226
Furniture and fixtures	10,957		10,169
Building and improvements	10,145		10,116
Machinery and equipment	33,601		32,761
Internal-use capitalized software	15,582		2,902
Construction in progress, including internal-use capitalized software not yet in service	1,214		11,685
Property, plant and equipment, at cost	71,725		67,859
Less allowances for depreciation and amortization	48,235		45,535
	$	23,490	$	22,324

F-19

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

NOTE 4 - Intangible Assets

Intangible assets other than goodwill, which are subject to amortization, consist of the following:


	Gross Carrying Amount		Accumulated Amortization		Net Balance
Balance at December 31, 2020
Customer relationships	$	5,760	$	(5,760)	$	0
Trademarks	3,100		(1,208)		1,892
Other intangibles	1,240		(1,240)		0
	$	10,100	$	(8,208)	$	1,892

Balance at December 31, 2019
Customer relationships	$	5,760	$	(4,840)	$	920
Trademarks	3,100		(1,008)		2,092
Other intangibles	1,240		(1,111)		129
	$	10,100	$	(6,959)	$	3,141

Amortization expense for intangible assets was $1.2 million in 2020, and $1.4 million in ~~2017, 2016~~2019 and ~~2015.~~2018.

Expected annual amortization expense of ~~HBB's~~ intangible assets for the next five years is ~~$1.4 million in years 2018 through 2019, $1.2 million in 2020,~~ $0.2 ~~million in 2021, and $0.2 million in 2022.~~million. The weighted average amortization period for ~~HBB's~~ intangible assets is approximately 8.9 years.

NOTE 6—5 - Current and Long-Term Financing

Financing arrangements ~~are obtained and maintained~~exist at the subsidiary level. Hamilton Beach ~~Holdings~~Brands Holding Company has not guaranteed any borrowings of its subsidiaries.

The following table summarizes ~~the Company's~~HBB's available and outstanding borrowings:

December 31
2017 2016
Total outstanding borrowings:
Revolving credit agreements — HBB $ 51,346
$ 37,917
Other debt — HBB —
797
Total debt outstanding $ 51,346
$ 38,714
Current portion of borrowings outstanding - HBB

31,346
12,714

Long-term portion of borrowings outstanding - HBB

20,000
26,000
Total available borrowings, net of limitations, under revolving credit agreements:
HBB 111,078
112,975
KC 13,589
20,525
$ 124,667
$ 133,500
Unused revolving credit agreements:
HBB 59,732
75,058
KC 13,589
20,525
$ 73,321
$ 95,583

Weighted average stated interest rate on total borrowings - HBB

3.82 % 2.26 %
Weighted average effective interest rate on total borrowings (including interest rate swap - HBB agreements) 3.83 % 2.67 %


	December 31
	2020			2019
Total outstanding borrowings for continuing operations:
Revolving credit agreements	$	98,360		$	58,305
Book overdrafts	0			192
Total outstanding borrowings	$	98,360		$	58,497

Current portion of borrowings outstanding	$	0		$	23,497
Long-term portion of borrowings outstanding	98,360			35,000
	$	98,360		$	58,497

Total available borrowings, net of limitations, under revolving credit agreements	$	123,277		$	114,366

Unused revolving credit agreements	$	24,917		$	56,061

Weighted average stated interest rate on total borrowings	2.51		%	4.16		%
Weighted average effective interest rate on total borrowings (including interest rate swap agreements)	2.88		%	3.82		%

Including swap settlements, interest paid on total debt was ~~$1.6~~$2.1 million, ~~$1.4~~$3.1 million, and ~~$1.8~~$3.1 million during ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, respectively. Interest capitalized was ~~$0.2~~$0.3 million in ~~2017 and less than $0.1~~2020, $0.4 million in ~~2016~~2019 and ~~2015.~~$0.3 million in 2018.

~~HBB:~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

On November 23, 2020, HBB ~~has a~~entered into Amendment No. 8 to Amended and Restated Credit Agreement. The Agreement amended and restated the Credit Agreement in its entirety and extended the term of HBB's credit facility to June 30, 2025, increased the credit facility from $115.0 million ~~senior secured floating-rate revolving~~to $125.0 million, amended the pricing grid and provided for an accordion feature to increase the facility by an additional $25 million upon HBB's request, subject to Lender consent. The Company expects to continue to borrow against the facility and make voluntary repayments within the next twelve months. As a result of the amendment, repayment of the credit facility ~~(the “HBB Facility”) that expires in~~is due on June ~~2021.~~30, 2025, therefore all borrowings are classified as long term debt as of December 31, 2020. The obligations under the HBB Facility are secured by substantially all of HBB's assets. ~~The approximate book value of HBB's assets held as collateral under the HBB Facility was $281.0 million as of December 31, 2017.~~

The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible ~~accounts receivable,~~trade receivables, inventory and trademarks of the borrowers, as defined in the HBB Facility. Adjustments to reserves booked against these assets, including inventory reserves, will change the eligible borrowing base and thereby impact the liquidity provided by the HBB Facility. A portion of the availability is denominated in Canadian dollars to provide funding to HBB's Canadian subsidiary. Borrowings bear interest at a floating rate, which can be a base rate, LIBOR, or bankers' acceptance rate, as defined in the HBB Facility, plus an applicable margin. The applicable margins, effective December 31, ~~2017,~~2020, for base rate loans and LIBOR loans denominated in U.S. dollars were ~~0.00%~~0.0% and ~~1.50%~~1.75%, respectively. The applicable margins, effective December 31, ~~2017,~~2020, for base rate loans and bankers' acceptance loans denominated in Canadian dollars were ~~0.00%~~0.0% and ~~1.50%~~1.75%, respectively. The HBB Facility also requires a fee of 0.25% per annum on the unused commitment. The margins and unused commitment fee under the HBB Facility are subject to quarterly adjustment based on average excess availability.

~~F-15~~

~~Table~~To reduce the exposure to changes in the market rate of ~~Contents~~interest, HBB has entered into interest rate swap agreements for a portion of the HBB Facility. Terms of the interest rate swap agreements require HBB to receive a variable interest rate and pay a fixed interest rate. HBB has interest rate swaps with notional values totaling $25.0 million at December 31, 2020 at an average fixed interest rate of 1.7%.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~HAMILTON BEACH BRANDS HOLDING COMPANY~~

~~(Tabular Amounts in Thousands, Except Per Share and Percentage Data)~~

The HBB Facility includes restrictive covenants, which, among other things, limit the payment of dividends to Hamilton Beach Holding, subject to achieving availability thresholds. Under Amendment No. 8 to the HBB ~~declared and paid a $35 million dividend~~Facility, dividends to Hamilton Beach Holding ~~which was subsequently paid~~are not to ~~NACCO~~exceed $6.0 million during any calendar year to the extent that for the thirty days prior to the ~~spin-off in September 2017, which under Amendment No. 5~~dividend payment date, and after giving effect to the dividend payment, HBB ~~Facility, has been excluded from the covenants. Other~~maintains excess availability of not less than ~~the $35 million dividend in September 2017, dividends~~$15.0 million. Dividends to Hamilton Beach Holding are discretionary to the extent that for the ~~thirty~~30 days prior to the dividend payment date, and after giving effect to the dividend payment, HBB maintains excess availability of not less than $25.0 million. The HBB Facility also requires HBB to achieve a minimum fixed charge coverage ratio in certain circumstances, as defined in the HBB Facility. At December 31, ~~2017,~~2020, HBB was in compliance with all financial covenants in the HBB Facility.

~~KC:~~ KC has a $20.0 million secured revolving line of credit that expires in October 2022 (the “KC Facility”). The obligations under the KC Facility are secured by substantially all assets of KC. The approximate book value of KC's assets held as collateral under the KC Facility was $43.4 million as of December 31, 2017.

The maximum availability under the KC Facility is derived from a borrowing base formula using KC's eligible inventory and eligible credit card accounts receivable, as defined in the KC Facility. Borrowings bear interest at a floating rate plus a margin based on the excess availability under the agreement, as defined in the KC Facility, which can be either a base rate plus a margin of 0.75% or LIBOR plus a margin of 1.75% as of December 31, 2017. The KC Facility also requires a fee of 0.25% per annum on the unused commitment.

The KC Facility allows for the payment of dividends to Hamilton Beach Holding, subject to certain restrictions based on availability and meeting a fixed charge coverage ratio as described in the KC Facility. Dividends are limited to (i) $6.0 million in any twelve-month period, so long as KC has excess availability, as defined in the KC Facility, of at least $5.0 million after giving effect to such payment and maintaining a minimum fixed charge coverage ratio of 1.1 to 1.0, as defined in the KC Facility; (ii) $2.0 million in any twelve-month period, so long as KC has excess availability, as defined in the KC Facility, of at least $5.0 million after giving effect to such payment and (iii) in such amounts as determined by KC, so long as KC has excess availability under the KC Facility of $10.0 million after giving effect to such payment. At December 31, 2017, KC was in compliance with all financial covenants in the KC Facility.NOTE 6 - Fair Value Disclosure

Recurring Fair Value Measurements

~~NOTE 7—Derivative Financial Instruments~~

The Company measures its derivatives at fair value using significant observable inputs, which is Level 2 as defined in the fair value hierarchy. The Company uses a present value technique that incorporates the LIBOR swap curve, foreign currency spot rates and foreign currency forward rates to value its derivatives, including its interest rate swap agreements and foreign currency exchange contracts, and also incorporates the effect of its subsidiary and counterparty credit risk into the valuation.

Other Fair Value Measurement Disclosures

The carrying amounts of cash and cash equivalents, trade receivables and accounts payable approximate fair value due to the short-term maturities of these instruments. The fair values of revolving credit agreements, including book overdrafts, which approximate book value, were determined using current rates offered for similar obligations taking into account subsidiary credit risk, which is Level 2 as defined in the fair value hierarchy. The fair value of assets held for sale, classified as Level 3, were determined using a market approach based on market participant inputs.

There were no transfers into or out of Levels 1 or 2 during the years ended December 31, 2020 and 2019. There was one transfer into Level 3 related to the $3.4 million of assets held for sale during the year ended December 31, 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

NOTE 7 - Derivative Financial Instruments

Foreign Currency Derivatives:

HBB held forward foreign currency exchange contracts with total notional amounts of ~~$11.7~~$12.3 million and ~~$9.0~~$13.2 million at December 31, ~~2017~~,2020, and ~~2016,~~2019, respectively, denominated primarily in Canadian dollars and Mexican pesos. The fair value of these contracts approximated a ~~net receivable~~payable of ~~$0.2~~$0.5 million ~~and~~ ~~$0.1 million~~at December 31, ~~2017~~2020 and ~~2016, respectively.~~a payable of $0.3 million at December 31, 2019.

Forward foreign currency exchange contracts that qualify for hedge accounting are used to hedge transactions expected to occur within the next twelve months. The mark-to-market effect of forward foreign currency exchange contracts that are considered effective as hedges has been included in AOCI.

Interest Rate Derivatives:

HBB has interest rate swaps that hedge interest payments on its one-month LIBOR borrowings. All swaps have been designated as cash flow hedges.

~~F-16~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~HAMILTON BEACH BRANDS HOLDING COMPANY~~

~~(Tabular Amounts in Thousands, Except Per Share and Percentage Data)~~

The following table summarizes the notional amounts, related rates and remaining terms of interest rate swap agreements ~~active and delayed~~for HBB at December 31 in millions:

Notional Amount Average Fixed Rate Remaining Term at
2017 2016 2017 2016 December 31, 2017
HBB - Interest rate swaps $ 20.0
$ 20.0
1.4 % 1.4 % Extending to January 2020
HBB - Delayed start interest rate swaps $ 15.0
$ 15.0
1.6 % 1.6 % Extending to January 2024
HBB - Delayed start interest rate swaps $ 10.0
$ 10.0
1.7 % 1.7 % Extending to January 2024


	Notional Amount				Average Fixed Rate				Remaining Term at
	2020		2019		2020		2019		December 31, 2020
Interest rate swaps	$	0	$	20.0	0	%	1.4	%	n/a
Interest rate swaps	$	25.0	$	15.0	1.7	%	1.6	%	Extending to January 2024
Delayed start interest rate swaps	$	0	$	10.0	0	%	1.7	%	n/a

The fair value of HBB's interest rate swap agreements was a ~~net receivable~~payable of ~~$0.9~~$1.2 million at December 31, ~~2017~~2020 and a ~~net receivable~~payable of ~~$0.8~~$0.1 million at December 31, ~~2016.~~2019. The mark-to-market effect of interest rate swap agreements that are considered effective as hedges has been included in AOCI. The interest rate swap agreements held by HBB on December 31, ~~2017~~2020 are expected to continue to be effective as hedges.

The following table summarizes the fair value of derivative instruments at December 31 as recorded in the Consolidated Balance Sheets:


	Asset Derivatives					Liability Derivatives
	Balance sheet location	2020		2019		Balance sheet location	2020		2019
Interest rate swap agreements
Current	Prepaid expenses and other current assets	$	0	$	0	Other current liabilities	$	380	$	21
Long-term	Other non-current assets	0		0		Other long-term liabilities	779		61
Foreign currency exchange contracts
Current	Prepaid expenses and other current assets	0		0		Other current liabilities	518		308










Total derivatives		$	0	$	0		$	1,677	$	390

Asset Derivatives Liability Derivatives
Balance sheet location 2017 2016 Balance sheet location 2017 2016
Derivatives designated as hedging instruments
Interest rate swap agreements
Current Prepaid expenses and other $ 109
$ 14
Other current liabilities $ —
$ —
Long-term Other non-current assets 785
760
Other long-term liabilities —
—
Foreign currency exchange contracts
Current Prepaid expenses and other 245
147
Other current liabilities 93
—
Total derivatives $ 1,139
$ 921
$ 93
$ —

~~NOTE 8—Fair Value Disclosure~~

~~Recurring Fair Value Measurements~~: The Company uses significant other observable inputs to value derivative instruments used to hedge foreign currency and interest rate risk; therefore, they are classified within Level 2 of the valuation hierarchy. The fair value for these contracts is determined based on exchange rates and interest rates, respectively. See Note 7 for further discussion of the Company’s derivative financial instruments.

~~There were no transfers into or out of Levels 1, 2 or 3 during the years ended December 31, 2017 and 2016.~~

~~Other Fair Value Measurement Disclosures:~~ The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The fair values of revolving credit agreements were determined using current rates offered for similar obligations taking into account subsidiary credit risk, which is Level 2 as defined in the fair value hierarchy.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts receivable and derivatives. HBB maintains significant accounts receivable balances with several large retail customers. At December 31, 2017 and 2016, receivables from HBB’s five largest customers represented 61.5% and 63.0%, respectively, of the Company’s consolidated net accounts receivable. HBB’s significant credit concentration is uncollateralized; however, historically minimal credit losses have been incurred. To further reduce credit risk associated with accounts receivable, the Company performs periodic credit evaluations of its customers, but does not generally require advance payments or collateral. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any one institution. See Note 7 for further discussion of the Company’s derivative financial instruments.

~~F-17~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

NOTE 9—8 - Leasing Arrangements

~~The Company~~HBB leases certain office and warehouse facilities ~~retail stores and~~as well as machinery and equipment under noncancellable operating leases that expire at various dates through ~~2031.~~2034. Many leases include renewal and/or fair value purchase options.

Future minimum operating lease payments at December 31, ~~2017~~2020 are:

Operating
Leases
2018 $ 23,633
2019 17,781
2020 14,267
2021 9,287
2022 5,709
Subsequent to 2022 20,273
Total minimum lease payments $ 90,950


	Operating Leases
2021	$	7,081
2022	6,738
2023	6,405
2024	6,355
2025	6,395
Subsequent to 2025	44,117
Total minimum lease payments	$	77,091

Rental expense from continuing operations net of sublease rental income for all operating leases, is reported in selling, general and administrative expenses and was $6.2 million in 2020 and $5.6 million in 2019 and 2018.

NOTE 9 - Stockholders' Equity and Earnings Per Share

Capital Stock

The authorized capital stock of the Company consists of Class A Common, Class B Common and one series of Preferred stock. Voting, dividend, conversion and liquidation rights of the Preferred stock is established by the Board upon issuance of such preferred stock.

Hamilton Beach Brands Holding Company Class A Common is traded on the New York Stock Exchange under the ticker symbol “HBB.” Because of transfer restrictions on Class B Common, no trading market has developed, or is expected to develop, for the Class B Common.

Subject to the rights of the holders of any series of preferred stock, each share of Class A Common will entitle the holder of the share to 1 vote on all matters submitted to stockholders, and each share of the Company's Class B Common will entitle the holder of the share to 10 votes on all such matters. Subject to the rights of the preferred stockholders, each share of Class A Common and Class B Common will be equal in respect of rights to dividends, except that in the case of dividends payable in stock, only Class A Common will be distributed with respect to Class A Common and only Class B Common will be distributed with respect to Class B Common. As the liquidation and dividend rights are identical, any distribution of earnings would be allocated to Class A and Class B stockholders on a proportionate basis, and accordingly the net income per share for each class of common stock is identical.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

The following table sets forth the Company's authorized capital stock information:


	December 31
	2020	2019
	(In thousands)
Preferred stock, par value $0.01 per share
Preferred stock authorized	5,000	5,000
Preferred stock outstanding	0	0
Class A Common stock, par value $0.01 per share
Class A Common stock authorized	70,000	70,000
Class A Common issued(1)(2)	10,006	9,805
Treasury Stock	365	365
Class B Common stock, par value $0.01 per share, convertible into Class A on a 1-for-1 basis
Class B Common stock authorized	30,000	30,000
Class B Common issued(1)	4,045	4,076

(1) Class B Common converted to Class A Common were 31 shares during 2020 and 345 shares 2019.

(2) The Company issued Class A Common shares of 170 during 2020 and 169 during 2019 related to the Company's stock compensation plan.

Stock Repurchase Program

In May 2018, the Company approved a stock repurchase program for the purchase of up to $25.0 million ~~$25.9~~of the Company's Class A Common Stock outstanding through December 31, 2019. On November 5, 2019, the Company's Board adopted a new stock repurchase program for the purchase of up to $25.0 million of the Company's Class A Common Stock outstanding starting January 1, 2020 and ~~$26.0 million~~ending December 31, 2021. During the year ended December 31, 2019, the Company repurchased 364,893 shares for an aggregate purchase price of $6.0 million. There were 0 share repurchases during the years ended December 31, 2020 and 2018.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in ~~2017, 2016,~~Thousands, Except Per Share and ~~2015,~~Percentage Data)

Accumulated Other Comprehensive Income (Loss)

The following table summarizes changes in accumulated other comprehensive income (loss) by component and related tax effects for periods shown:


	Foreign Currency		Deferred Gain (Loss) on Cash Flow Hedging		Pension Plan Adjustment		Total
Balance, January 1, 2018	$	(7,573)	$	508	$	(6,678)	$	(13,743)
Reclassification due to adoption of ASU 2018-02	0		118		(1,286)		(1,168)
Other comprehensive income (loss)	(1,162)		174		(2,583)		(3,571)
Reclassification adjustment to net income (loss)	0		213		729		942
Tax effects	83		(134)		490		439
Balance, December 31, 2018	$	(8,652)	$	879	$	(9,328)	$	(17,101)
Other comprehensive income (loss)	481		(2,199)		1,882		164
Reclassification adjustment to net income (loss)	0		490		727		1,217
Tax effects	(50)		489		(851)		(412)
Balance, December 31, 2019	$	(8,221)	$	(341)	$	(7,570)	$	(16,132)
Other comprehensive income (loss)	(896)		(718)		844		(770)
Reclassification adjustment to net income (loss)	0		(642)		701		59
Tax effects	(658)		357		(332)		(633)
Balance, December 31, 2020	$	(9,775)	$	(1,344)	$	(6,357)	$	(17,476)

Earnings per share

The weighted average number of shares of Class A Common and Class B Common outstanding used to calculate basic and diluted earnings (loss) per share were as follows:


	2020		2019		2018
Basic weighted average shares outstanding	13,657		13,690		13,699
Dilutive effect of share-based compensation awards	55		36		32
Diluted weighted average shares outstanding	13,712		13,726		13,731

Basic earnings (loss) per share:
Continuing operations	$	1.76	$	1.10	$	1.68
Discontinued operations	1.62		(2.09)		(0.39)
Basic and diluted earnings (loss) per share	$	3.39	$	(0.99)	$	1.29

Diluted earnings (loss) per share:
Continuing operations	$	1.76	$	1.10	$	1.68
Discontinued operations	1.62		(2.09)		(0.39)
Diluted earnings (loss) per share	$	3.37	$	(0.99)	$	1.29

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

NOTE 10 - Revenue

Revenue is recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services, which includes an estimate for variable consideration.

HBB’s warranty program to the consumer consists generally of an assurance-type limited warranty lasting for varying periods of up to ten years for electric appliances, with the majority of products having a warranty of one to three years. There is no guarantee to the customer as HBB may repair or replace, at its option, those products returned under warranty. Accordingly, the Company determined that no separate performance obligation exists.

HBB products are not sold with a general right of return. However, based on historical experience, a portion of products sold are estimated to be returned due to reasons such as product failure and excess inventory stocked by the customer, which, subject to certain terms and conditions, HBB will agree to accept. Product returns, customer programs and incentive offerings, including special pricing agreements, price competition, promotions, and other volume-based incentives are accounted for as variable consideration.

A description of revenue sources and performance obligations for HBB are as follows:

Consumer and Commercial product revenue

Transactions with both consumer and commercial customers generally originate upon the receipt of a purchase order from the customer, which in some cases are governed by master sales agreements, specifying product(s) that the customer desires. Contracts for product revenue have an original duration of one year or less, and payment terms are generally standard and based on customer creditworthiness. Revenue from product sales is recognized at the point in time when control transfers to the customer, which is either when product is shipped from the Company's facility, or delivered to customers, depending on the shipping terms. The amount of revenue recognized varies primarily with changes in returns. In addition, the Company offers price concessions to our customers for incentive offerings, special pricing agreements, price competition, promotions or other volume-based arrangements. We evaluated such agreements with our customers and determined returns and price concessions should be accounted for as variable consideration.

Consumer product revenue consists of sales of small electric household and specialty housewares appliances to traditional brick and mortar and ecommerce retailers, distributors and directly to the end consumer. A majority of this revenue is in North America.

Commercial product revenue consists of sales of products for restaurants, fast-food chains, bars and hotels. Approximately one-half of our commercial sales are in the U.S. and the other half is in markets across the globe.

License revenue

From time to time, the Company enters into exclusive and non-exclusive licensing agreements which grant the right to use certain of HBB’s intellectual property ("IP") in connection with designing, manufacturing, distributing, advertising, promoting and selling the licensees’ products during the term of the agreement. The IP that is licensed generally consists of trademarks, trade names, patents, trade dress, and/or logos (the “Licensed IP”). In exchange for granting the right to use the Licensed IP, HBB receives a royalty payment, which is a function of (1) the total net sales of products that use the Licensed IP and (2) the royalty percentage that is stated in the licensing agreement. HBB recognizes revenue at the later of when the subsequent sales occur or satisfying the performance obligation (over time).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

The following table presents the HBB's revenue on a disaggregated basis for the year ending:


	Year Ended
	December 31
	2020		2019		2018

Consumer products	$	568,685	$	559,279	$	576,270
Commercial products	30,066		48,028		50,153
Licensing	4,962		4,479		3,659
Total revenues	$	603,713	$	611,786	$	630,082

Walmart Inc. and its global subsidiaries accounted for approximately 35%, 33%, and 33% of HBB’s revenue in 2020, 2019, and 2018, respectively. ~~The Company also recognized $0.4 million~~Amazon.com, Inc. and its subsidiaries accounted for approximately 16%, 14%, and 10% of the HBB's revenue in ~~2017, 2016,~~2020, 2019, and ~~2015, respectively~~2018 respectively. HBB’s five largest customers accounted for ~~rental income on subleases~~approximately 64%, 58%, and 53% of ~~equipment~~the HBB’s revenue in 2020, 2019, and ~~buildings under operating leases in which it was the lessee.~~2018, respectively.

NOTE ~~10—~~11 - Contingencies

Various legal and regulatory proceedings and claims have been or may be asserted against Hamilton Beach ~~Holding~~Brands Holdings Company and certain subsidiaries relating to the conduct of ~~their~~its businesses, including product liability, patent infringement, asbestos related claims, environmental and other claims. These proceedings and claims are incidental to the ordinary course of business of the Company. Management believes that it has meritorious defenses and will vigorously defend the Company in these actions. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss.

HBB is a defendant in a legal proceeding in which the plaintiff alleges that certain HBB products infringe the plaintiff’s patents. On May 3, 2019, the jury returned its verdict finding that the Company had infringed certain patents of the plaintiff and, as a result, awarded the plaintiff damages in the amount of $3.2 million. The damages award was subsequently reduced to $2.1 million because the Court determined that part of the damages award based on lost profits was speculative. On August 14, 2020, the court entered an order awarding the plaintiff additional sales post-trial and interest on the damages award through July 31, 2020 and continuing interest in a de minimis amount until the judgment is satisfied. Both parties filed a Notice of Appeal with the US Circuit Court of Appeals for the Federal Circuit and oral argument is expected to be in the second quarter of 2021. As of December 31, 2020, the accrual for the contingent loss is $3.1 million. HBB maintains that it does not infringe any valid patent claim and the damages award is not supported by the evidence and continues to vigorously pursue the appeal of the judgment and adverse lower court rulings.

Hamilton Beach Brands Holding Company is a defendant in a legal proceeding instituted in February 2020 in which the plaintiff seeks to hold the Company liable for the unsatisfied portion of an agreed final judgment that plaintiff obtained against KC related to KC’s failure to continue to operate NaN stores during the term of the store leases. All KC stores were closed by December 31, 2019 and on January 23, 2020 a Certificate of Dissolution of Ohio Limited Liability Company was filed with the Ohio Secretary of State, effective as of January 21, 2020. In February 2020, KC agreed to the entry of a final judgment in favor of the plaintiff in the amount of $8.1 million and in April 2020 the plaintiff received $0.3 million in the final distribution of KC assets to KC creditors. The Company believes that the plaintiff’s claims are without merit and will vigorously defend against plaintiff’s claims.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

These matters are subject to inherent uncertainties and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on the ~~Company’s~~Company's financial position, results of operations and cash flows offor the period in which the ruling occurs, or in future periods.

Environmental matters

HBB is investigating or remediating historical environmental contamination at some current and former sites operated by HBB or by businesses it acquired. Based on the current stage of the investigation or remediation at each known site, HBB estimates the total investigation and remediation costs and the period of assessment and remediation activity required for each site. The estimate of future investigation and remediation costs is primarily based on variables associated with site clean-up, including, but not limited to, physical characteristics of the site, the nature and extent of the contamination and applicable regulatory programs and remediation standards. No assessment can fully characterize all subsurface conditions at a site. There is no assurance that additional assessment and remediation efforts will not result in adjustments to estimated remediation costs or the time frame for remediation at these sites.

HBB's estimates of investigation and remediation costs may change if it discovers contamination at additional sites or additional contamination at known sites, if the effectiveness of its current remediation efforts change, if applicable federal or state regulations change or if HBB's estimate of the time required to remediate the sites changes. HBB's revised estimates may differ materially from original estimates.

At December 31, 2020 and December 31, 2019, HBB had accrued undiscounted obligations of $3.1 million and $4.4 million respectively, for environmental investigation and remediation activities. The reduction in the amount accrued at December 31, 2020 compared to December 31, 2019 is due to a change in the expected type and extent of investigation and remediation activities associated with one of the sites. HBB estimates that it is reasonably possible that it may incur additional expenses in the range of 0 to $1.7 million related to the environmental investigation and remediation at these sites. Additionally, the Company recorded a $1.5 million receivable as of December 31, 2019 related to a probable recovery of environmental investigation and remediation costs associated with one of the sites from a responsible party in exchange for release from all future obligations by that party. As of December 31, 2020, the receivable has been collected and $1.0 million is restricted cash.

NOTE 12 - Income Taxes

The components of income (loss) from continuing operations before income taxes and the income tax expense for the years ended December 31 are as follows:


	2020		2019		2018
Income (loss) from continuing operations before income taxes
Domestic	$	31,140	$	24,835	$	30,835
Foreign	2,592		(658)		(350)
	$	33,732	$	24,177	$	30,485
Income tax expense (benefit) within continuing operations
Current income tax expense (benefit):
Federal	$	7,006	$	2,966	$	(323)
State	1,877		1,106		356
Foreign	2,213		3,525		1,919
Total current	11,096		7,597		1,952
Deferred income tax expense (benefit):
Federal	(924)		856		5,592
State	(325)		1,676		447
Foreign	(182)		(1,045)		(565)
Total deferred	(1,431)		1,487		5,474
	$	9,665	$	9,084	$	7,426

~~F-18~~

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Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

At ~~December 31, 2017~~ and 2016, HBB had accrued undiscounted obligations of $8.9 million and $8.7 million, respectively, for environmental investigation and remediation activities at these sites. In addition, HBB estimates that it is reasonably possible that it may incur additional expenses in the range of zero to $5.3 million related to the environmental investigation and remediation at these sites.

During 2015, HBB recorded $1.5 million in “Selling, general and administrative expenses” in the Consolidated Statement of Operations for environmental investigation and remediation at HBB’s Picton, Ontario facility as a result of environmental studies.

~~NOTE 11—Stockholders' Equity and Earnings Per Share~~

~~Capital Stock:~~ The authorized capital stock of the Company consists of Class A Common, Class B Common and one series of Preferred stock. Voting, dividend, conversion and liquidation rights of the Preferred stock would be established by the Board upon issuance of such preferred stock.

Hamilton Beach Holding Class A common stock is traded on the New York Stock Exchange under the ticker symbol “HBB.” Because of transfer restrictions on Class B Common, no trading market has developed, or is expected to develop, for the Company's Class B Common. Subject to the rights of the holders of any series of preferred stock, each share of the Company's Class A Common will entitle the holder of the share to one vote on all matters submitted to stockholders, and each share of the Company's Class B Common will entitle the holder of the share to ten votes on all such matters.

Subject to the rights of the preferred stockholders, each share of Class A Common and Class B Common will be equal in respect of rights to dividends, except that in the case of dividends payable in stock, only Class A Common will be distributed with respect to Class A Common and only Class B Common will be distributed with respect to Class B Common. As the liquidation and dividend rights are identical, any distribution of earnings would be allocated to Class A and Class B stockholders on a proportionate basis, and accordingly the net income per share for each class of common stock is identical.

~~Amounts Reclassified out of Accumulated Other Comprehensive Income:~~ ~~The following table summarizes the amounts reclassified out of AOCI and recognized in the Consolidated Statements of Operations:~~

Amount reclassified from AOCI
Details about AOCI components 2017 2016 2015 Location of loss (gain) reclassified from AOCI into income
(In thousands)
Loss (gain) on cash flow hedging
Foreign exchange contracts $ 853
$ (11 ) $ (860 ) Cost of sales
Interest rate contracts 63
183
243
Interest expense
916
172
(617 ) Total before income tax expense (benefit)
Tax effect (275 ) (67 ) 235
Income tax (benefit) expense
$ 641
$ 105
$ (382 ) Net of tax

Pension plan
Actuarial loss $ 511
$ 508
$ 748

^(a)
Tax effect (205 ) (195 ) (236 ) Income tax benefit
$ 306
$ 313
$ 512
Net of tax
Total reclassifications for the period $ 947
$ 418
$ 130
Net of tax

~~(a) These AOCI components are included in the computation of pension expense. See Note 13 for a discussion of the Company's pension expense.~~

~~F-19~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~HAMILTON BEACH BRANDS HOLDING COMPANY~~

~~(Tabular Amounts in Thousands, Except Per Share and Percentage Data)~~

~~Earnings per share:~~ Basic income per common share has been computed by dividing net income by the weighted-average number of shares of the Company’s common stock outstanding. Diluted income per common share adjusts common stock outstanding for the effect of all potentially dilutive shares of the Company’s common stock. The weighted average number of shares of Class A common stock and Class B common stock outstanding used to calculate basic and diluted earnings per share were as follows:

2017 2016 2015
Basic weighted average shares outstanding (1) 13,673
13,673
13,673
Dilutive effect of outstanding restricted stock awards 12
—
—
Diluted weighted average shares outstanding (1) 13,685
13,673
13,673

Basic earnings per share (1) $ 1.31
$ 1.91
$ 1.44

Diluted earnings per share (1) $ 1.31
$ 1.91
$ 1.44

~~(1)~~

On September 29, 2017, NACCO, Hamilton Beach Holding's former parent company, spun-off the Company to NACCO stockholders. In the spin-off, NACCO stockholders, in addition to retaining their shares of NACCO common stock, received one share of Hamilton Beach Holding Class A common stock and one share of Hamilton Beach Holding Class B common stock for each share of NACCO Class A or Class B common stock. The basic and diluted earnings per share amounts for the Company have been calculated based upon the number of shares distributed in the spin-off for all periods prior to the spin-off.

~~NOTE 12—Income Taxes~~

~~The components of income before income tax provision and the income tax provision for the years ended~~ ~~December 31~~ ~~are as follows:~~

2017 2016 2015
Income before income tax provision
Domestic $ 31,328
$ 39,136
$ 31,277
Foreign 4,749
2,027
759
$ 36,077
$ 41,163
$ 32,036
Income tax provision
Current income tax provision:
Federal $ 11,484
$ 12,140
$ 10,953
State 1,381
501
1,908
Foreign 1,365
556
1,143
Total current 14,230
13,197
14,004
Deferred income tax provision (benefit):
Federal 4,122
1,458
(1,242 )
State (437 ) 239
(43 )
Foreign 257
90
(394 )
Total deferred 3,942
1,787
(1,679 )
$ 18,172
$ 14,984
$ 12,325

~~F-20~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~HAMILTON BEACH BRANDS HOLDING COMPANY~~

~~(Tabular Amounts in Thousands, Except Per Share and Percentage Data)~~

A portion of Hamilton Beach Holding's U.S. operating results will be included in the consolidated federal income tax return filed by NACCO. The Company's allocation of taxes through the spin-off date will be in accordance with the Tax Allocation Agreement. In general, the Tax Allocation Agreement between the Company and NACCO provides that federal income taxes are computed by the Company as if it had filed a tax return on a standalone basis calculated using the separate return method. Subsequent to the spin-off, the Company will file a separate federal tax return in the U.S. for the period subsequent to the spin-off date. The Company made ~~net~~0 federal income tax payments during 2020 and made payments of ~~$9.9 million, $11.0~~$1.9 million and ~~$7.9~~$8.3 million during ~~2017, 2016,~~2019 and ~~2015,~~2018, respectively, to the IRS and to NACCO as a member of the consolidated income tax ~~return.~~return for periods prior to spin off. The Company made foreign and state income tax payments of ~~$1.9~~$2.9 million, ~~$2.8~~$3.6 million, and ~~$1.9~~$2.6 million during ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, respectively. During the same periods, income tax refunds totaled ~~$0.0~~$1.0 million ~~$0.6 million,~~in 2020 and $0.1 million ~~respectively.~~in 2019 and 2018.

A reconciliation of the federal statutory and effective income tax rate for the years ended December 31 is as follows:



	2020				2019				2018
	$		%		$		%		$		%
Income (loss) from continuing operations before income taxes	$	33,732			$	24,177			$	30,485
Statutory taxes at 21%	$	7,092	21.0	%	$	5,077	21.0	%	$	6,402	21.0	%
State and local income taxes	1,136		3.4	%	1,031		4.3	%	729		2.4	%
Valuation allowances	614		1.8	%	2,190		9.1	%	42		0.1	%
Other non-deductible expenses	415		1.2	%	253		1.0	%	429		1.4	%
Credits	(700)		(2.1)	%	(1,195)		(4.9)	%	(348)		(1.1)	%

Loss on Kitchen Collection dissolution	616		1.8	%	0		0	%	0		0	%
Unrecognized tax benefits	708		2.1	%	2,719		11.2	%	1,427		4.7	%
Other, net	(216)		(0.6)	%	(991)		(4.1)	%	(1,255)		(4.1)	%
Income tax provision	$	9,665	28.7	%	$	9,084	37.6	%	$	7,426	24.4	%

2017 2016 2015
Income before income tax provision $ 36,077
$ 41,163
$ 32,036
Statutory taxes at 35.0% $ 12,627
$ 14,407
$ 11,212
State and local income taxes 901
1,019
540
Provisional effect of the Tax Act 4,654
—
—
Non-deductible spin-related costs 540
—
—
Other non-deductible expenses 411
414
364
Valuation allowances 369
170
606
Other, net (1,330 ) (1,026 ) (397 )
Income tax provision $ 18,172
$ 14,984
$ 12,325
Effective income tax rate 50.4 % 36.4 % 38.5 %

A detailed summary of the total deferred tax assets and liabilities in the Company's Consolidated Balance Sheets resulting from differences in the book and tax basis of assets and liabilities follows:


	December 31					December 31
	2017		2016			2020		2019
Deferred tax assets					Deferred tax assets
Tax carryforwards	$	5,034	$	2,610	Tax carryforwards	$	3,002	$	2,867
Inventories	207		421
Depreciation and amortization	716		1,841
Inventory					Inventory	2,114		316
Accrued expenses and reserves	6,929		9,423		Accrued expenses and reserves	4,436		5,896
Other employee benefits	3,238		5,321		Other employee benefits	4,700		1,500
Other	696		1,454		Other	2,374		1,412
Total deferred tax assets	16,820		21,070		Total deferred tax assets	16,626		11,991
Less: Valuation allowance	1,916		1,614
Less: Valuation allowances					Less: Valuation allowances	(2,102)		(1,069)
	14,904		19,456			14,524		10,922
Deferred tax liabilities					Deferred tax liabilities
Inventory					Inventory	1,099		0
Accrued pension benefits	2,079		1,609		Accrued pension benefits	3,262		2,623
Unremitted foreign earnings	—		343
Depreciation and amortization					Depreciation and amortization	3,198		2,051
Total deferred tax liabilities	2,079		1,952		Total deferred tax liabilities	7,559		4,674
Net deferred asset	$	12,825	$	17,504
Net deferred tax asset					Net deferred tax asset	$	6,965	$	6,248

As of December 31, 2020 and 2019, respectively, HBB maintained valuation allowances with respect to certain deferred tax assets relating primarily to operating losses in certain non-U.S. jurisdictions that HBB believes are not likely to be realized.

~~F-21~~

F-29

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

The following table summarizes the tax carryforwards and associated carryforward periods and related valuation allowances where the Company has determined that realization is uncertain:

December 31, 2017

Net deferred tax
asset

Valuation
allowance

Carryforwards
expire during:
Alternative minimum tax credit $ 2,429
$ —
(1)
Non-U.S. net operating loss 1,658
1,658
2018 - Indefinite
State losses 1,198
—
2020 - 2035
Total $ 5,285
$ 1,658



	December 31, 2020
	Net deferred tax asset		Valuation allowance		Carryforwards expire during:

Non-U.S. net operating loss	$	3,002	$	1,363	2021 - Indefinite

December 31, 2016

Net deferred tax
asset

Valuation
allowance

Carryforwards
expire during:
Non-U.S. net operating loss $ 1,376
$ 1,376
2018 - Indefinite
State losses 1,053
—
2020 - 2035
Research credit 547
—
2028 - 2030
Total $ 2,976
$ 1,376


	December 31, 2019
	Net deferred tax asset		Valuation allowance		Carryforwards expire during:
Non-U.S. net operating loss	$	2,867	$	987	2020 - Indefinite

~~(1) The Tax Act repealed the corporate alternative minimum tax for tax years beginning after December 31, 2017. This credit is refundable in 2021, if not fully utilized prior to 2021.~~

The Company evaluates its deferred tax assets to determine if a valuation allowance is required based on the consideration of all available evidence, both positive and negative, using a “more likely than not” standard. A valuation allowance is required where realization is determined to no longer meet the “more likely than not” standard. The establishment of a valuation allowance does not have an impact on cash, nor does such an allowance preclude the Company from using its loss carryforwards or other deferred tax assets in future periods.

~~The Company has a valuation allowance for certain foreign deferred tax assets.~~ Based upon the review of historical earnings and the relevant expiration of carryforwards, the Company believes the valuation allowances are appropriate and does not expect to release valuation allowances within the next twelve months that would have a significant effect on the Company’s financial position or results of operations. Furthermore, the Company considers the necessity of valuation allowance application to state loss carryforwards and believes sufficient positive evidence exists for future profitability of the Company, including available tax strategies as necessary, to realize the benefit of losses in the future.

On December 22, 2017, the U.S. federal government enacted the Tax Act, which significantly revises U.S. tax law. The Tax Act will positively impact the Company’s future effective income tax rate due to the reduction of the U.S. federal corporate tax rate from 35 percent to 21 percent, effective January 1, 2018.

In addition to the reduction in the U.S. federal corporate tax rate mentioned above, other significant changes to existing tax law include (1) a deduction received on dividends of foreign earnings with a related tax for the deemed repatriation of unremitted foreign earnings; (2) limitations on the deductibility of certain executive compensation for publicly traded companies; (3) accelerated expensing of capital investment, subject to phase out beginning in 2023; (4) a new limitation on deductible interest expense; and (5) a new U.S. minimum tax on earnings of foreign subsidiaries.

Subsequent to the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides a measurement period of up to one year after the enactment date for companies to finalize the recognition of the income tax effects of the Tax Act. As a result of the Tax Act and pursuant to SAB 118, the Company recorded a provisional net tax charge of $4.7 million in the period ending December 31, 2017. Included in the provisional income tax charge is $4.1 million for the remeasurement of U.S. deferred tax assets and liabilities resulting from the reduction in the U.S. federal corporate tax rate from 35% to 21%, $0.4 million related to executive compensation that may not be deductible when paid in future periods, and $0.2 million related to the net estimated income tax on deemed repatriation of foreign earnings.

~~F-22~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~HAMILTON BEACH BRANDS HOLDING COMPANY~~

~~(Tabular Amounts in Thousands, Except Per Share and Percentage Data)~~

The Company has computed the provisional income tax charge based on information available; however, there is still uncertainty as to the application of the Tax Act, in particular as it relates to state income taxes. Further, management has not yet completed the analysis of the components of the computation, including the amount of foreign earnings subject to U.S. income tax, and the portion of foreign earnings held in cash or other specified assets. As the Company completes the analysis of the Tax Act in 2018, it may make adjustments to the provisional amounts, which may impact the provision for income taxes in the period in which the adjustments are made. The ultimate impact of the Tax Act may differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions, additional regulatory guidance that may be issued, and the computation of state income taxes as there is uncertainty on conformity to the U.S. federal tax system following the Tax Act.

As of December 31, ~~2017,~~2020, the cumulative unremitted earnings of the Company's foreign subsidiaries are approximately ~~$19.6~~$15.6 million. ~~In consideration of the Tax Act, the Company has no longer provided a deferred tax liability with respect to the cumulative unremitted earnings.~~ The Company has recorded ~~a provisional estimate of~~ the tax impact for the unremitted earnings as allowed under the Tax Cuts and Jobs Act (the "Tax Act"), a portion of which is classified in ~~Other~~other long-term liabilities ~~in the Consolidated Balance Sheets~~ as the Company ~~intends to elect~~has elected to make payments over eight years. The Company continues to conclude all material entities’ foreign earnings will be indefinitely reinvested in its foreign operations and will remain offshore in order to meet the capital and business needs outside of the U.S.

~~The tax returns of NACCO,~~ As a result, the Company ~~and certain~~does not provide a deferred tax liability with respect to the cumulative unremitted earnings. It is not practicable to determine the deferred tax liability associated with these undistributed earnings due to the availability of ~~its subsidiaries are under routine examination by various taxing authorities.~~foreign tax credits. The Company ~~has~~made an accounting policy election to account for the global intangible low-tax income as a current period expense when incurred. The Company recognizes any tax impacts of global intangible low-taxed income (GILTI) as period costs similar to other special deductions, and not ~~been informed of any material assessment~~as deferred taxes for which an accrual has not been previously provided and the Company would vigorously contest any material assessment. Management believes any potential assessment would not materially affect the Company’s financial condition or results of operations.basis differences.

The following is a reconciliation of the Company's total gross unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the financial statements for the years ended December 31, ~~2017, 2016,~~2020, 2019, and ~~2015.~~2018. Approximately ~~$0.6~~$4.0 million, ~~$0.4~~$3.0 million, and ~~$0.8~~$1.4 million of these gross amounts as of December 31, ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, respectively, relate to permanent items that, if recognized, would impact the effective income tax rate. This amount differs from the gross unrecognized tax benefits presented in the table below due to the decrease in U.S. federal income taxes which would occur upon the recognition of the state tax benefits included herein.


	2020		2019		2018
Balance at January 1	$	4,266	$	1,576	$	881
Additions (reductions) based on tax positions related to prior years	(116)		97		91
Additions based on tax positions related to the current year	130		2,593		1,110
Reductions for lapse of statute of limitations	(166)		0		0
Reductions due to settlements with taxing authorities	0		0		(506)
Balance at December 31	$	4,114	$	4,266	$	1,576

2017 2016 2015
Balance at January 1 $ 671
$ 1,199
$ 180
Additions based on tax positions related to prior years —
167
1,119
Additions based on tax positions related to the current year 210
165
—
Reductions due to settlements with taxing authorities —
(860 ) —
Reductions due to lapse of the applicable statute of limitations —
—
(100 )
Balance at December 31 $ 881
$ 671
$ 1,199

The Company records interest and penalties on uncertain tax positions as a component of the income tax provision. The Company ~~recorded immaterial amounts~~recognized expense of $0.7 million and $0.1 million related to interest and penalties as of December 31, ~~2017~~2020 and ~~2016,~~2019, respectively. The ~~Company expects the~~total amount of ~~unrecognized tax benefits will change within the next 12 months; however, the change in unrecognized tax benefits, which~~interest and penalties accrued was $0.7 million and $0.1 million as of December 31, 2020 and 2019, respectively. It is reasonably possible within the next 12 months there could be a change in unrecognized tax benefits related to the restatement which is ~~not~~ expected to have ~~a significant~~an approximate $4.7 million effect on the Company's ~~financial position, results~~cash flows.

F-30

Table of ~~operations or cash flows.~~Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

In general, the Company operates in taxing jurisdictions that provide a statute of limitations period ranging from three to five years for the taxing authorities to review the applicable tax filings. The examination of NACCO's ~~2013-2015~~2013-2016 U.S. federal tax returns is ~~ongoing.~~ongoing, and exam years from 2017 onwards remain open for federal tax returns. The Company is generally open for examination of state and foreign jurisdictions for the tax year 2016 and beyond. In addition, the Company does not have any material taxing jurisdictions in which the statute of limitations has been extended beyond the applicable time frame allowed by law.

NOTE 13 - Retirement Benefit Plans

Defined Benefit Plans

The Company maintains 2 defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods. The Company's U.S. plan was frozen, effective December 31, 1996, for participation and benefit accrual purposes (except cash balance interest credits required by law). Similarly, the Company’s non-U.S. plan was frozen, effective December 31, 2008.

The assumptions used in accounting for the defined benefit plans were as follows for the years ended December 31:


	2020		2019		2018
U.S. Plan
Discount rate for pension benefit obligation	1.87	%	2.88	%	4.00	%
Discount rate for net periodic benefit (income) expense	2.88	%	4.00	%	3.30	%
Expected long-term rate of return on assets for net periodic pension (income) expense	7.50	%	7.50	%	7.50	%
Non-U.S. Plan
Discount rate for pension benefit obligation	2.38	%	2.96	%	3.50	%
Discount rate for net periodic benefit (income) expense	2.96	%	3.50	%	3.50	%
Expected long-term rate of return on assets for net periodic pension (income) expense	5.00	%	5.50	%	5.50	%

Set forth below is a detail of the net periodic pension (income) expense, included in other expense (income), net for the defined benefit plans for the years ended December 31:


	2020		2019		2018
U.S. Plan
Interest cost	$	527	$	727	$	681
Expected return on plan assets	(2,011)		(1,987)		(2,047)
Amortization of actuarial loss	631		561		623
Net periodic pension (income) expense	$	(853)	$	(699)	$	(743)

Non-U.S. Plan
Interest cost	$	128	$	144	$	142
Expected return on plan assets	(253)		(263)		(286)
Amortization of actuarial loss	70		72		200
Net periodic pension (income) expense	$	(55)	$	(47)	$	56

~~F-23~~

F-31

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HAMILTON BEACH BRANDS HOLDING COMPANY

(Tabular Amounts in Thousands, Except Per Share and Percentage Data)

~~NOTE 13—Retirement Benefit Plans~~

~~Defined Benefit Plans:~~ The Company maintains two defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods. All eligible employees of the Company, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans.

~~The assumptions used in accounting for the defined benefit plans were as follows for the years ended December 31:~~

2017 2016 2015
U.S. Plans
Discount rate for pension benefit obligation 3.30 % 3.60 % 3.70 %
Discount rate for net periodic benefit cost 3.60 % 3.70 % 3.45 %
Expected long-term rate of return on assets for net periodic benefit (income) expense 7.50 % 7.50 % 7.75 %
Non-U.S. Plan
Discount rate for pension benefit obligation 3.25 % 3.75 % 4.00 %
Discount rate for net periodic benefit cost 3.75 % 4.00 % 3.75 %
Expected long-term rate of return on assets for net periodic benefit (income) expense 5.50 % 5.50 % 5.75 %

~~Set forth below is a detail of the net periodic pension expense (income) for the defined benefit plans for the years ended December 31:~~

2017 2016 2015
U.S. Plans
Interest cost $ 811
$ 875
$ 914
Expected return on plan assets (2,074 ) (2,071 ) (2,159 )
Amortization of actuarial loss 501
495
564
Net periodic pension income $ (762 ) $ (701 ) $ (681 )

Non-U.S. Plan
Interest cost $ 153
$ 144
$ 152
Expected return on plan assets (264 ) (248 ) (272 )
Amortization of actuarial loss 10
13
146
Settlements —
—
37
Net periodic pension (income) expense $ (101 ) $ (91 ) $ 63

Set forth below is the detail of other changes in plan assets and benefit obligations recognized in other comprehensive ~~income (loss)~~loss (income) for the years ended December 31:


											2020		2019		2018
	2017			2016			2015
U.S. Plans
U.S. Plan										U.S. Plan
Current year actuarial loss (gain)	$	(2,506	)	$	243		$	1,373		Current year actuarial loss (gain)	$	(1,080)	$	(1,727)	$	2,347
Amortization of actuarial loss	(501		)	(495		)	(564		)	Amortization of actuarial loss	(631)		(561)		(623)
Total recognized in other comprehensive (income) loss	$	(3,007	)	$	(252	)	$	809
Total recognized in other comprehensive loss (income)										Total recognized in other comprehensive loss (income)	$	(1,711)	$	(2,288)	$	1,724
Non-U.S. Plan										Non-U.S. Plan
Current year actuarial loss (gain)	$	60		$	318		$	(128	)
Current year actuarial loss										Current year actuarial loss	$	236	$	(155)	$	236
Amortization of actuarial loss	(10		)	(13		)	(146		)	Amortization of actuarial loss	(70)		(72)		(200)
Settlements	—			—			(37		)
Total recognized in other comprehensive loss (income)	$	50		$	305		$	(311	)	Total recognized in other comprehensive loss (income)	$	166	$	(227)	$	36

~~F-24~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~HAMILTON BEACH BRANDS HOLDING COMPANY~~

~~(Tabular Amounts in Thousands, Except Per Share and Percentage Data)~~

The following table sets forth the changes in the benefit obligation and the plan assets during the year and the funded status of the defined benefit plans at December 31:

31:


	2017						2016							2020				2019
	U.S. Plan			Non-U.S. Plan			U.S. Plan			Non-U.S. Plan				U.S. Plan		Non-U.S. Plan		U.S. Plan		Non-U.S. Plan
Change in benefit obligation													Change in benefit obligation
Projected benefit obligation at beginning of year	$	23,651		$	4,021		$	24,932		$	3,519		Projected benefit obligation at beginning of year	$	19,374	$	4,570	$	19,131	$	4,084
Interest cost	811			153			875			144			Interest cost	527		128		727		144
Actuarial loss (gain)	(521		)	291			11			430
Actuarial (gain) loss													Actuarial (gain) loss	972		399		1,266		311
Benefits paid	(2,225		)	(153		)	(2,167		)	(176		)	Benefits paid	(1,895)		(205)		(1,750)		(182)
Foreign currency exchange rate changes	—			292			—			104			Foreign currency exchange rate changes	0		108		0		213
Projected benefit obligation at end of year	$	21,716		$	4,604		$	23,651		$	4,021		Projected benefit obligation at end of year	$	18,978	$	5,000	$	19,374	$	4,570
Accumulated benefit obligation at end of year	$	21,716		$	4,604		$	23,651		$	4,021		Accumulated benefit obligation at end of year	$	18,978	$	5,000	$	19,374	$	4,570
Change in plan assets													Change in plan assets
Fair value of plan assets at beginning of year	$	27,402		$	4,712		$	27,730		$	4,383		Fair value of plan assets at beginning of year	$	28,900	$	5,350	$	25,671	$	4,744
Actual return on plan assets	4,060			497			1,839			356			Actual return on plan assets	4,065		428		4,979		726
Employer contributions	—			55			—			17
Benefits paid	(2,225		)	(153		)	(2,167		)	(176		)	Benefits paid	(1,895)		(205)		(1,750)		(182)
Foreign currency exchange rate changes	—			345			—			132			Foreign currency exchange rate changes	0		(76)		0		62
Fair value of plan assets at end of year	$	29,237		$	5,456		$	27,402		$	4,712		Fair value of plan assets at end of year	$	31,070	$	5,497	$	28,900	$	5,350
Funded status at end of year	$	7,521		$	852		$	3,751		$	691		Funded status at end of year	$	12,092	$	497	$	9,526	$	780
Amounts recognized in the balance sheets consist of:													Amounts recognized in the balance sheets consist of:
Noncurrent assets	$	7,521		$	852		$	3,751		$	691
Components of accumulated other comprehensive loss (income) consist of:
Actuarial (gain) loss	$	(9,703	)	$	(1,033	)	$	12,712		$	1,029
Non-current assets													Non-current assets	$	12,092	$	497	$	9,526	$	780
Components of accumulated other comprehensive loss consist of:													Components of accumulated other comprehensive loss consist of:
Actuarial loss													Actuarial loss	$	(7,429)	$	(1,224)	$	(9,140)	$	(1,058)
Deferred taxes	3,687			327			(4,830		)	(327		)	Deferred taxes	1,901		395		2,280		348
Currency differences	—			44			—			(89		)
	$	(6,016	)	$	(662	)	$	7,882		$	613			$	(5,528)	$	(829)	$	(6,860)	$	(710)



Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value $0.01 Per Share	HBB	New York Stock Exchange



	DECEMBER 31 2017			DECEMBER 31 2016			Change
Cash and cash equivalents	$	10,906		$	11,340		$	(434	)
Other net tangible assets	74,695			79,107			(4,412		)
Goodwill and intangible assets, net	12,153			13,535			(1,382		)
Net assets	97,754			103,982			(6,228		)
Total debt	(51,346		)	(38,714		)	(12,632		)
Total equity⁽¹⁾	$	46,408		$	65,268		$	(18,860	)
Debt to total capitalization	53		%	37		%	16		%



	2017			2016			Change
Operating activities:
Net income	$	21,117		$	26,557		$	(5,440	)
Depreciation and amortization	4,072			4,681			(609		)
Other	4,754			1,279			3,475
Working capital changes	(1,156		)	26,214			(27,370		)
Net cash provided by operating activities	28,787			58,731			(29,944		)

Investing activities:
Expenditures for property, plant and equipment	(6,198		)	(4,814		)	(1,384		)
Other	21			26			(5		)
Net cash used for investing activities	(6,177		)	(4,788		)	(1,389		)

Cash flow before financing activities	$	22,610		$	53,943		$	(31,333	)



	2017			2016			Change
Financing activities:
Net additions (reductions) to revolving credit agreements	$	12,630		$	(19,651	)	$	32,281
Cash dividends paid to Hamilton Beach Holding	(36,162		)	(32,000		)	(4,162		)
Other	—			(186		)	186
Net cash used for financing activities	$	(23,532	)	$	(51,837	)	$	28,305


	Payments Due by Period															Payments Due by Period
Contractual Obligations	Total		2018		2019		2020		2021		2022		Thereafter		Contractual Obligations	Total		2021		2022		2023		2024		2025		Thereafter
HBB Facility	$	51,346	$	31,346	$	—	$	—	$	20,000	$	—	$	—

Revolving credit agreements															Revolving credit agreements	$	98,360	$	—	$	—	$	—	$	—	$	98,360	$	—
Variable interest payments on HBB Facility	7,043		1,613		1,730		2,413		1,287		—		—		Variable interest payments on HBB Facility	7,960		2,587		2,358		1,182		994		839		—
Purchase and other obligations	266,152		256,177		3,736		3,301		2,938		—		—		Purchase and other obligations	284,816		284,664		51		47		54		—		—
Operating leases	36,863		5,926		5,677		5,529		3,759		1,815		14,157
Operating lease obligations															Operating lease obligations	77,091		7,081		6,738		6,405		6,355		6,395		44,117
Total contractual cash obligations	$	361,404	$	295,062	$	11,143	$	11,243	$	27,984	$	1,815	$	14,157	Total contractual cash obligations	$	468,227	$	294,332	$	9,147	$	7,634	$	7,403	$	105,594	$	44,117



					PAGE
PART I.
			Item 1.	BUSINESS	1
			Item 1A.	RISK FACTORS	4
			Item 1B.	UNRESOLVED STAFF COMMENTS	1413
			Item 2.	PROPERTIES	1514
			Item 3.	LEGAL PROCEEDINGS	1514
			Item 4.	MINE SAFETY DISCLOSURES	1514
	~~Item 4A.~~	~~EXECUTIVE OFFICERS OF THE REGISTRANT~~	16
PART II.
			Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	1714
			Item 6.	SELECTED FINANCIAL DATA	1715
			Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1817
			Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4126
			Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	4126
			Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	4126
			Item 9A.	CONTROLS AND PROCEDURES	4126
			Item 9B.	OTHER INFORMATION	4228
PART III.
			Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	4228
			Item 11.	EXECUTIVE COMPENSATION	4228
			Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	4228
			Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	4229
			Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	4329
PART IV.
			Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	4329
SIGNATURES					4733
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA					F-~~F-1~~1



	2017
	Sales Price
	High		Low		Cash Dividend
Fourth quarter	$	39.89	$	24.97	$	0.0850



	Revenues			Operating profit			Net income

Consolidated results for the year ended December 31, 2015	$	767,862		$	35,554		$	19,711
Increase (decrease) in 2016
HBB	(15,807		)	8,232			6,808
KC	(6,637		)	211			65
Eliminations	(61		)	(623		)	(405		)
Consolidated results for the year ended December 31, 2016	$	745,357		$	43,374		$	26,179

Consolidated results for the year ended December 31, 2016	$	745,357		$	43,374		$	26,179
Increase (decrease) in 2017
HBB	9,901			(1,546		)	(5,440		)
KC	(15,831		)	(3,794		)	(2,917		)
Eliminations	1,322			101			83
Consolidated results for the year ended December 31, 2017	$	740,749		$	38,135		$	17,905



	Year Ended December 31						% of Sales Revenue, net
	2017			2016			2017		2016
Revenues	$	615,071		$	605,170		100.0	%	100.0	%
Cost of sales	479,367			476,756			77.9	%	78.8	%
Gross profit	135,704			128,414			22.1	%	21.2	%
Operating expenses⁽¹⁾	94,217			85,381			15.3	%	14.1	%
Operating profit	41,487			43,033			6.7	%	7.1	%
Interest expense	1,577			1,165			0.3	%	0.2	%
Other expense, net	166			770			—	%	0.1	%
Income before income taxes	39,744			41,098			6.5	%	6.8	%
Income tax expense⁽²⁾	18,627			14,541			3.0	%	2.4	%
Net income	$	21,117		$	26,557		3.4	%	4.4	%

Effective income tax rate⁽²⁾	46.9		%	35.4		%


⁽¹⁾	~~Operating expenses include Selling, general and administrative expenses, amortization of intangibles and (gain)/loss on sale of assets.~~



	Revenues
2015	$	620,977
Increase (decrease) from:
Unit volume and product mix	(9,259		)
Foreign currency	(7,700		)
Average sales price	1,152
2016	$	605,170



	Operating Profit
2015	$	34,801
Increase (decrease) from:
Gross profit	6,543
Selling, general and administrative expenses	2,957
Foreign currency	(1,268		)
2016	$	43,033



	Revenues
2016	$	144,351
Increase (decrease) from:
Comparable stores	(10,049		)
Closed stores	(9,752		)
New stores	3,373
Other	597
2017	$	128,520



	Revenues
2015	$	150,988
Increase (decrease) from:
Closed stores	(7,907		)
Comparable stores	(3,981		)
New stores	5,028
Other	223
2016	$	144,351


~~(a)~~	~~Debt to total capitalization is not meaningful as KC has no outstanding debt at December 31, 2017 or December 31, 2016.~~



10.30*10.21						Amendment ~~No.1~~No. 6 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc., as Parent, and Weston Brands, LLC, as US Borrowers, and Hamilton Beach Brands Canada, Inc., as Canadian Borrower, dated May 14, 2018, is incorporated by reference to Exhibit 10.1 of Hamilton Beach Brands Holding Company's Current Report on Form 10-Q, filed on August 1, 2018.
10.22						Amendment No. 7 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc. (as US Borrower), and Hamilton Beach Brands Canada, Inc. (as Canadian Borrower), as Borrowers, dated as of May 15, 2020, is incorporated by reference to Exhibit 10.2 of Hamilton Beach Brands Holding Company's Current Report on Form 10-Q, filed on July 24, 2020.
10.23						Amendment No. 8 to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties Hereto as the Lenders, Hamilton Beach Brands, Inc., as Parent and U.S. Borrower, and Hamilton Beach Brands Canada, Inc., as Canadian Borrower, dated November 23, 2020.
10.24						The Hamilton Beach Brands, Inc. Annual Incentive Compensation Plan (Effective January 1, 2014) (incorporated herein by reference to Exhibit 10.1 to the NACCO Industries, Inc. ~~Executive Excess Retirement~~Current Report on Form 8-K, filed by NACCO Industries, Inc. on May 9, 2014, Commission File Number 1-9172).
10.25*						Amendment No. 1 The Hamilton Beach Brands, Inc. Annual Incentive Compensation Plan (Effective ~~as of September 28, 2012)~~January 1, 2014), is incorporated by reference to Exhibit ~~10.30~~10.32 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.3110.26						Amendment No. 2 to the Hamilton Beach Brands, Inc. Annual Incentive Compensation Plan, dated as of March 1, 2014, is incorporated by reference to Exhibit 10.3 of Hamilton Beach Brands Holding Company's Current Report on Form 10-Q, filed on October 30, 2018.
10.27*						Hamilton Beach Brands, Inc. Long-Term Incentive Compensation Plan (Amended and Restated Effective March 1, 2015) is incorporated herein by reference to Exhibit 10.2 to NACCO Industries, Inc. Current Report on Form 8-K, filed by NACCO Industries, Inc. on May 18, 2015, Commission File Number 1-9172.
10.28*						Amendment No. 1 to Hamilton Beach Brands, Inc. Long-Term Incentive Compensation Plan (Amended and Restated Effective March 1, 2015), is incorporated by reference to Exhibit 10.31 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.3210.29						Amendment No. ~~1 The~~2 to the Hamilton Beach Brands, Inc. ~~Annual~~Long-Term Incentive Compensation Plan, dated as of March 1, 2015, is incorporated by reference to Exhibit 10.2 of Hamilton Beach Brands Holding Company's Current Report on Form 10-Q, filed on October 30, 2018.
10.30*						Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan (Effective ~~January 1, 2014)~~September 29, 2017), is incorporated by reference to Exhibit ~~10.32~~10.34 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.3310.31						Form of Cashless Exercise Award Agreement for the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan, is incorporated by reference to Exhibit 10.36 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.32*						Form of Non-Cashless Exercise Award Agreement for the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan is incorporated by reference to Exhibit 10.37 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.33*						Amendment No. 1 to the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan, dated as of September 29, 2017, is incorporated by reference to Exhibit 10.1 of Hamilton Beach Brands Holding Company's Current Report on Form 10-Q, filed on October 30, 2018.
10.34*						Amended and Restated Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan, dated as of March 1, 2020, is incorporated by reference to Exhibit 10.1 of Hamilton Beach Brands Holding Company's Current Report on Form 10-Q, filed on July 24, 2020.
10.35*						Hamilton Beach Brands Holding Company Supplemental Executive Long-Term Incentive Bonus Plan (Effective September 29, 2017), is incorporated by reference to Exhibit 10.38 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.36*						Form of Award Agreement for the Hamilton Beach Brands Holding Company Supplemental Executive Long-Term Incentive Bonus Plan, is incorporated by reference to Exhibit 10.39 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.37*						Hamilton Beach Brands Holding Company Non-Employee Director’s Equity Compensation Plan (Effective September 29, 2017), is incorporated by reference to Exhibit 10.35 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.38*						The Hamilton Beach Brands, Inc. Excess Retirement Plan (As Amended and Restated Effective January 1, 2015) (incorporated herein by reference to Exhibit 10.71 to the NACCO Industries, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2014, Commission File Number 1-9172).
10.39*						Amendment No.1 to The Hamilton Beach Brands, Inc. Excess Retirement Plan (As Amended and Restated Effective January 1, 2015) (incorporated herein by reference to Exhibit 10.77 to the NACCO Industries, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2015, Commission File Number 1-9172).




10.40*		Amendment No.2 to The Hamilton Beach Brands, Inc. Excess Retirement Plan (As Amended and Restated Effective January 1, 2015), is incorporated by reference to Exhibit 10.33 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.34*10.41		Consulting Agreement, dated as of December 14, 2018 between Alfred M. Rankin, Jr. and Hamilton Beach Brands Holding Company, Executive Long-Term Equity Incentive Plan (Effective September 29, 2017), is incorporated by reference to Exhibit 10.34 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.35*	Hamilton Beach Brands Holding Company Non-Employee Director’s Equity Compensation Plan (Effective September 29, 2017), is incorporated by reference to Exhibit 10.35 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.36*	Form of Cashless Exercise Award Agreement for the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan, is incorporated by reference to Exhibit 10.36 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
10.37*	~~Form of Non-Cashless Exercise Award Agreement for the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan~~effective January 1, 2019, is incorporated by reference to Exhibit 10.37 of ~~Amendment No. 2 of the~~ Hamilton Beach Brands Holding ~~Company’s S-1 Registration Statement~~Company's Current Report on Form 8-K, filed on ~~September 18, 2017.~~December 28, 2018.
10.38*10.42		~~Hamilton Beach Brands Holding Company Supplemental Executive Long-Term Incentive Bonus Plan (Effective September 29, 2017), is incorporated by reference to Exhibit 10.38~~Forbearance Agreement, dated as of ~~Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.~~
10.39*	Form of Award Agreement for the Hamilton Beach Brands Holding Company Supplemental Executive Long-Term Incentive Bonus Plan, is incorporated by reference to Exhibit 10.39 of Amendment No. 2 of the Hamilton Beach Brands Holding Company’s S-1 Registration Statement filed on September 18, 2017.
~~10.40~~	~~Third Amendment to Credit Agreement~~October 23, 2019, by and ~~among The Kitchen Collection, LLC, as Lead Borrower, Borrowers hereto, Guarantors hereto, Lenders hereto and~~between Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, ~~and~~ Swing Line Lender, ~~dated as of October 20, 2017~~and Lender and The Kitchen Collection, LLC is incorporated by reference to Exhibit ~~10.13~~10.1 of ~~the~~ Hamilton Beach Brands Holding ~~Company’s~~Company's Current Report on Form ~~10-Q~~8-K, filed on ~~November 1, 2017.~~October 25, 2019.

~~21.1~~
21.1						A list of the subsidiaries of the Company is attached hereto as Exhibit 21.



31(i)(1)						Certification of Gregory H. Trepp pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act is attached hereto as Exhibit 31(i)(1).
31(i)(2)						Certification of ~~James H. Taylor~~Mi c helle O. Mosier pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act is attached hereto as Exhibit 31(i)(2).



(32)						Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Gregory H. Trepp and ~~James H. Taylor~~Michelle O. Mosier



101.INS						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document



*						Management contract or compensation plan or arrangement required to be filed as an exhibit pursuant to Item15(b) of this Annual Report on Form 10-K.



Report of Ernst & Young LLP, Independent Registered Public Accounting Firm ~~— For each of the three years in the period ended December 31, 2017.~~			F-~~F-3~~3
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm on Internal Control over Financial Reporting ~~— As of December 31, 2017.~~			F-~~F-4~~4
Consolidated Statements of Operations ~~— Year ended December 31, 2017, 2016 and 2015.~~			F-~~F-5~~6
Consolidated Statements of Comprehensive Income ~~— Year ended December 31, 2017, 2016, and 2015~~(Loss)			F-~~F-6~~7
Consolidated Balance Sheets ~~— December 31, 2017 and December 31, 2016.~~			F-~~F-7~~8
Consolidated Statements of Cash Flows ~~— Year ended December 31, 2017, 2016 and 2015.~~			F-~~F-8~~9
Consolidated Statements of Equity ~~— Year ended December 31, 2017, 2016 and 2015.~~			F-~~F-9~~10
Notes to Consolidated Financial ~~Statements.~~Statements			F-~~F-10~~11



			~~/s/ Ernst & Young LLP~~

~~We have served as the Company’s auditor since 2017.~~

~~Cleveland, Ohio~~
~~March 7, 2018~~



												Accumulated Other Comprehensive Income (Loss)
	Class A Common Stock		Class B Common Stock		Capital in Excess of Par Value			Retained Earnings			Foreign Currency Translation Adjustment				Deferred Gain (Loss) on Cash Flow Hedging				Pension Plan Adjustment				Total Stockholders' Equity
	(In thousands, except per share data)
Balance, January 1, 2015	$	—	$	—	$	75,031		$	17,848			$	(3,789	)		$	326			$	(8,177	)	$	81,239
Net income	—		—		—			19,711				—				—				—			19,711
Cash dividends to NACCO Industries, Inc.	—		—		—			(15,000		)		—				—				—			(15,000		)
Current period other comprehensive (loss) income	—		—		—			—				(2,756		)		399				(757		)	(3,114		)
Reclassification adjustment to net income	—		—		—			—				—				(382		)		512			130
Balance, December 31, 2015	$	—	$	—	$	75,031		$	22,559			$	(6,545	)		$	343			$	(8,422	)	$	82,966
Net income	—		—		—			26,179				—				—				—			26,179
Cash dividends to NACCO Industries, Inc.	—		—		—			(42,000		)		—				—				—			(42,000		)
Current period other comprehensive (loss) income	—		—		—			—				(2,078		)		168				(385		)	(2,295		)
Reclassification adjustment to net income	—		—		—			—				—				105				313			418
Balance, December 31, 2016	$	—	$	—	$	75,031		$	6,738			$	(8,623	)		$	616			$	(8,494	)	$	65,268
Net income	—		—		—			17,905				—				—				—			17,905
Issuance of common stock, net of conversions	88		48		(136		)	—				—				—				—			—
Cash dividends to NACCO Industries, Inc.	—		—		(27,122		)	(10,878		)		—				—				—			(38,000		)
Cash dividends on Class A Common and Class B Common: $0.085 per share	—		—		—			(1,162		)		—				—				—			(1,162		)
Current period other comprehensive income (loss)	—		—		—			—				689				(749		)		1,510			1,450
Reclassification adjustment to net income	—		—		—			—				—				641				306			947
Balance, December 31, 2017	$	88	$	48	$	47,773		$	12,603			$	(7,934	)		$	508			$	(6,678	)	$	46,408



	Operating Leases
2018	$	23,633
2019	17,781
2020	14,267
2021	9,287
2022	5,709
Subsequent to 2022	20,273
Total minimum lease payments	$	90,950



	Amount reclassified from AOCI
Details about AOCI components	2017			2016			2015			Location of loss (gain) reclassified from AOCI into income
	(In thousands)
Loss (gain) on cash flow hedging
Foreign exchange contracts	$	853		$	(11	)	$	(860	)	Cost of sales
Interest rate contracts	63			183			243			Interest expense
	916			172			(617		)	Total before income tax expense (benefit)
Tax effect	(275		)	(67		)	235			Income tax (benefit) expense
	$	641		$	105		$	(382	)	Net of tax

Pension plan
Actuarial loss	$	511		$	508		$	748		^(a)
Tax effect	(205		)	(195		)	(236		)	Income tax benefit
	$	306		$	313		$	512		Net of tax
Total reclassifications for the period	$	947		$	418		$	130		Net of tax



	December 31, 2017
	Net deferred tax asset		Valuation allowance		Carryforwards expire during:
Alternative minimum tax credit	$	2,429	$	—	(1)
Non-U.S. net operating loss	1,658		1,658		2018 - Indefinite
State losses	1,198		—		2020 - 2035
Total	$	5,285	$	1,658



	December 31, 2016
	Net deferred tax asset		Valuation allowance		Carryforwards expire during:
Non-U.S. net operating loss	$	1,376	$	1,376	2018 - Indefinite
State losses	1,053		—		2020 - 2035
Research credit	547		—		2028 - 2030
Total	$	2,976	$	1,376


	2017 Actual Allocation		2016 Actual Allocation		Target Allocation Range		2020 Actual Allocation		2019 Actual Allocation		Target Allocation Range
U.S. equity securities	45.8	%	45.2	%	36.0% - 54.0%	U.S. equity securities	45.5	%	45.9	%	36.0% - 54.0%
Non-U.S. equity securities	20.5	%	19.7	%	16.0% - 24.0%	Non-U.S. equity securities	20.3	%	20.4	%	16.0% - 24.0%
Fixed income securities	32.9	%	33.8	%	30.0% - 40.0%	Fixed income securities	33.8	%	33.2	%	30.0% - 40.0%
Money market	0.8	%	1.3	%	0.0% - 10.0%	Money market	0.4	%	0.5	%	0.0% - 10.0%


	U.S.		Other		Consolidated
2020
Revenue from unaffiliated customers	$	493,573	$	110,140	$	603,713
Property, plant and equipment, net	$	18,021	$	5,469	$	23,490
2019
Revenue from unaffiliated customers	$	463,608	$	148,178	$	611,786
Property, plant and equipment, net	$	16,828	$	5,496	$	22,324
2018
Revenue from unaffiliated customers	$	488,520	$	141,562	$	630,082
Property, plant and equipment, net	$	15,344	$	5,498	$	20,842



	United States		Other		Consolidated
2017
Revenues from unaffiliated customers, based on the customers’ location	$	608,490	$	132,259	$	740,749
Property, plant and equipment, net	$	14,078	$	5,005	$	19,083
2016
Revenues from unaffiliated customers, based on the customers’ location	$	626,367	$	118,990	$	745,357
Property, plant and equipment, net	$	10,861	$	5,082	$	15,943
2015
Revenues from unaffiliated customers, based on the customers’ location	$	647,073	$	120,789	$	767,862
Property, plant and equipment, net	$	9,273	$	5,564	$	14,837


	2020

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenue	$	120,846	$	138,297	$	110,549	$	234,021
Gross profit	$	25,040	$	35,254	$	23,748	$	54,612
Operating profit	$	503	$	10,895	$	(2,405)	$	28,422

Income (loss) from continuing operations, net of tax	$	(1,354)	$	8,065	$	(2,010)	$	19,366
Income (loss) from discontinued operations, net of tax	22,866		(305)		0		(370)
Net income (loss)	$	21,512	$	7,760	$	(2,010)	$	18,996

Basic earnings (loss) per share:
Continuing operations	$	(0.10)	$	0.59	$	(0.15)	$	1.41
Discontinued operations	1.68		(0.02)		0		(0.03)
Basic earnings (loss) per share	$	1.58	$	0.57	$	(0.15)	$	1.39

Diluted earnings (loss) per share:
Continuing operations	$	(0.10)	$	0.59	$	(0.15)	$	1.40
Discontinued operations	1.68		(0.02)		0		(0.03)
Diluted earnings (loss) per share	$	1.58	$	0.57	$	(0.15)	$	1.37


			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts — Describe		Deductions — Describe			Balance at End of Period (B)
(In thousands)
2020
Reserves deducted from asset accounts:
Allowance for doubtful accounts	$	1,023	$	412	$	0	$	291	(A)	$	1,144
Deferred tax valuation allowances	$	7,625	$	614	0		$	6,137	(C, D)	$	2,102
2019
Reserves deducted from asset accounts:
Allowance for doubtful accounts	$	713	$	309	$	0	$	(1)	(A)	$	1,023
Deferred tax valuation allowances	$	1,162	$	6,502	$	0	$	39	(C)	$	7,625
2018
Reserves deducted from asset accounts:
Allowance for doubtful accounts	$	1,177	$	11	$	0	$	475	(A)	$	713

Deferred tax valuation allowances	$	1,968	$	0	$	0	$	806	(C)	$	1,162


~~(B)~~	~~Payments and customer deductions for product returns, discounts and allowances.~~

~~Current Position~~

~~Other Positions~~

~~L.J. Kennedy~~

~~Director of Finance, Treasurer and Secretary of KC (from September 2016)~~

~~From prior to 2013 to September 2016, Treasurer and Secretary of KC.~~